Charging More For Less By Redefining Value

Jan 12, 2016

 

The idea of charging more for less and calling it a bargain might seem crazy, but if it makes sense if the smaller size is presented as a greater value.

 

Another post looked at the practice of raising prices by decreasing size. For example a maker of canned coffee who felt that there would be significant resistance to a price increase might choose instead to introduce a "stealth" increase, by leaving the price of the product the same while decreasing the size of the package from one pounds (16 ounces) to just 13 ounces.

Sometimes the package stays the same size but with more empty space (also called slack fill) inside it. In such cases the seller is usually hoping that the consumer won't notice the difference – the can/jar/box/bag looks the same as it always did, and they might not catch the fine print or pay attention to the additional empty space when they open it up.

Slack fill isn't always an option. Since it could clearly open the door to some deceptive practices there are strict rules about when, and how much, slack fill is allowed. For example it's okay to leave extra space in bags of potato chips for the purpose of protecting the product from breakage.

When packages have to shrink alongside the contents sellers sometimes look for other ways to explain the fact that the price didn't shrink as well. One popular option is to promote better, higher-effeciciency eco-friendly packaging. Another approach is calling the smaller package a "convenience" size.

With food other option is to point out the benefit in the form of lower calories. Because the promise of fewer calories is so tempting sometimes prices don't just stay the same as the size goes down, they actually go up.

It seems crazy – paying more money for less product because it has less calories. But it happens all the time.

Here is one example:

 

pricing_increase-price-decrease-size.jpg

 

These "special" cans of soda are just 90 calories! And they are on sale for just $3.99 for six!

Of course they are a lot smaller too, just 222ml instead of the standard 355ml. In fact they are almost 40% smaller.

They are also more expensive, not matter how you look at it. The same store, on the same day, was selling twelve 355ml cans for just $3.50.

 

adjusting-prices-by-adjusting-size.jpg

 

So you could buy six small 222ml cans for $3.99 ($0.66 per can or $0.002 per ml) or twelve large 355ml cans for $3.50 ($0.58 per can or $0.0008 per ml). The smaller cans, which are “on special” are more expensive whether purchased by the case, the can or the ml. On a per ml basis the small can is more than twice as expensive as it is in the larger can.

It would be crazy, except for the fact that what is being sold is not the diminished volume but the diminished calories.



Category: Examples

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Related Material

Aggressive Example Of A Stealthy Price Increase

A "stealth" tactic for raising prices without anybody noticing stops being stealthy when the effective increase is wildly aggressive.

Slack Fill, De-Sheeting and Weight-Out: Stealth Price Increases

Slack fill, de-sheeting and weight-out – different terms describing the common practice of stealthily increasing price by decreasing quantity.

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