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Give a Limited Choice

 

DisciplinesMarketing > Pricing > Give a Limited Choice

Description | Example | Discussion | See also

 

Description

When setting prices for your products and services, it is good to give options, but bad to give them too many choices. Keep the options few and simple. Often only two or three choices are best, though how many you do offer may depend on the customer and the situation.

Example

A car salesperson offers a cheap bottom-of-the-range model, an expensive top-of-the-range model and a slightly above mid-range model. Most customers choose the mid-range vehicle.

A company selling many varieties of tea limits its range to the more popular types and finds that it sells even more.

Discussion

When people have no choice, their need for a sense of control is impacted, so they are likely to grab back control, for example by refusing or asking to see more. On the other hand, when they are offered lots of choices, they are faced with significant cognitive effort in choosing which option is the best, which again impacts their sense of control. This is worsened by the way we tend to compare items two at a time, which makes effort go up in a square-law fashion with increasing options.

As a result, the best way to get people to choose is to give them a limited choice. Sales people know this when they use the alternative close in offering only two items. Sometimes three choices are better, as people often have a central tendency in their choosing, to offer three, with the central item being the logical choice.

See also

Alternative Close, The Need for a Sense of Control

 

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