#626 - Richard Shotton - 8 Psychology Hacks Behind The World’s Biggest Businesses
Modern Wisdom
The Ethics of Pricing Tactics: Balancing Short and Long Term Gains
People's reactions in commercial situations are driven by fairness. A study showed that when people were offered $8 for a task but were told that others were paid $10, there was a 25% drop in their willingness to accept the offer. Brands can tap into people's anger over unfair treatment by reframing their competition as treating their customers unfairly. Fairness is often ignored by brands, but it plays a significant role in consumer behavior. Adding a discount code box during checkout can make customers feel like they are not getting a good deal compared to others and may deter them from completing the purchase. The principle of fairness should be considered in pricing tactics to avoid angering customers and potential retribution. Balancing short-term gains with long-term consequences is crucial in determining how far pricing tactics should be pushed. Morality should be evaluated by considering how people would feel if they knew about the tactics being used.
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