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Deceptive pricing

July 26, 2011 by Dale Furtwengler — President, Furtwengler & Associates, P.C.

"I'm not upset that you lied to me, I'm upset that from now on I can't believe you." - Friedrich Nietzsche

In business this sentiment often results in lost sales. Who among us upon realizing that we've been mislead hasn't declared "I'll never do business with ____ again." Indeed, we'll shout it from the rooftops to avenge the misdeed and assure that others don't fall victim to these shenanigans. Why?

Because the emotions we experience go well beyond the sense of trust lost. We feel:

• Betrayed
• Insulted
• Disrespected

Placing trust in another requires making ourselves vulnerable. Having that trust violated, that vulnerability exploited, is personal. That's why we feel betrayed.

If that weren't bad enough we've had our intelligence insulted. The seller assumes that we're too stupid to realize that he/she has taken advantage of us.

Finally, we realize that the seller doesn't respect us. A reality made obvious by the fact that he/she isn't interested in our welfare.

As consumers we've experienced these emotions. The question, then, is why, as sellers, do we:

• Reduce the size of our offerings rather than raising our prices?
• Place an asterisk by our offers hoping that buyers won't read the fine print?
• Lead with a low-priced item that we know won't satisfy customers' needs?

All of these are forms of deceptive pricing. Instead of having the courage to say that they raised prices, food producers redesign packages to hide the fact that the quantity is smaller. The same is often true of detergents and other cleaning supplies. Restaurants reduce portion size.

Regardless of how it's done these companies are raising prices without telling their customers. That's lying. Yes the package states the quantity, but it's redesigned to hide the fact that it's a smaller size - so that buyers won't take time to read what's on the package.

The same is true of the dreaded asterisk which often hides the less savory aspects of the offer. Aspects that have the effect of raising the price of the purchase. Ditto when leading with an item that doesn't meet the expectations we created in our ads, then upselling to the higher priced alternative.

Interestingly I don't think that most of these deceptive practices are performed maliciously. I don't believe that the sellers want to harm their buyers. Instead, these sellers are suffering a scarcity mentality. They simultaneously feel that they need to raise prices to be able to continue to serve their customers well and fear an erosion of their customer base if they raise prices.

Unfortunately their analysis stops there. What they fail to consider is the impact it will have on customers once they realized they've been deceived. And they will eventually make that discovery. So what's the alternative?

If you feel the need to raise prices, be honest about it. Emphasize the value in your marketing so that buyers realize that it's still a bargain at the higher price. If you find that your buyers are more budget-conscious, then have your marketing materials indicate that you're aware of their concerns and that you're offering a variety of sizes/portions to fit any budget.

Using this approach lets them know that you care about them and the challenges they face without hiding the fact that your prices are going up. Follow this simple strategy and you'll replace what would have been feelings of betrayal, insult and disrespect with those of respect, appreciation and loyalty. How's that for a worthwhile trade off?

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