Behavioral Pricing: Instrument for Revenue Growth

When was the last time you visited Starbucks? Chances are you did not opt for the small coffee, but rather bought a medium or large coffee. What did you buy at McDonalds last time you went through the McDrive? Did you choose the entire burger menu or only a single burger? Your choices may have been influenced by what we call ‘behavioral pricing tactics’.

The use of behavioral pricing tactics to influence customer buying behavior is not a new phenomenon but we see it being used increasingly by traditional B2C and B2B companies as well. We identify three specific opportunities in behavioural pricing tactics to be considered:

1. Maximize willingness-to-pay by differentiating pricing based on customer value perception
2. Simplify portfolios and use price laddering to guide customers to more valuable products
3. Understand what combination of products are bought and use bundling to increase cross-sell

1. Maximize willingness-to-pay by…