#2: Emotional Pricing Is Like Drunk Dialing
A few weeks ago, we published 15 thoughts about pricing for the new year — 2015. A lot of people read the article, and so I thought I’d expand on a few of the topics and give them their own posts.
Second on my list of 15 for ’15 is: Emotional pricing is like drunk dialing.
I should update this. Many of you would never, ever drunk dial. You would drunk text. I liked the alliteration of “Drunk Dial” so I went with it in the presentation, but it doesn’t matter because the idea is the same: Don’t do it!
It feels good to express some powerful emotion via text to that person who really needs to know the important thing you want them to know, but you would not approve if you were sober. You’ll be scrolling through your phone in the morning looking for incriminating evidence of your own foolishness and wincing at what you find.
That’s how you should feel if you set prices in an emotional frame of mind. Business is not just cold, hard rationality. It wouldn’t work that way. Do you think Steve Jobs analyzed his way to developing the iPhone? Certainly, logic is valuable, but what people don’t say enough is that emotions are key to being successful in business, too. Just as there’s a time and place for hard-headed logic, there’s a time and place for using your feelings to find a breakthrough solution.
Pricing just isn’t one of those.
This is true for the same reasons that you probably shouldn’t dive from a high dive emotionally either: There are laws of physics governing what is about to happen, and those laws don’t give a candied fig about your emotions.
What do I mean when I say emotional pricing? Any time someone says the word “should” related to a price, you should pay careful attention to whether or not they’re emotional about the price. For example, “a piece of work like this should be worth at least $80 to people.” Are you saying that you believe that the work is worth $80 or that for some reason, people ought to value it at $80? If the latter is what you mean, then you need to take a step back from the keyboard and ask a different question. You think they should value the event at $80, but what do they think? Are you in sync with them, or are you emotionally invested in the quality of the production?
It’s great to be proud of the work that you’re marketing. In fact, it’s critical, but that pride should express itself other places besides pricing.
Sometimes fear causes emotional pricing. A marketer could start to worry about losing money. That’s when the “lizard brain” takes over and decides that, by God, people are just going to have to pay more, and prices go up. That, too, is emotional pricing. A high price set in panic in order to break even may be completely unrealistic as far as the market is concerned, and an unrealistic high price has only one effect: The number of tickets sold goes down. I’ll spare you the economics of it (unless you want to talk about it, in which case, contact me), but in the vast majority of cases, in our business, if you price a ticket too high, not only do the number of tickets sold go down, but so does total revenue. The increased price cannot make up for the lost units.
Another form of emotional pricing might reflect an uninformed belief about the audience. “People who buy lawn seats are cheap” might be an example of this. If you rashly price the lawn, believing this to be the case, at giveaway prices, you’ll know it because you’ll sell those seats really fast and struggle in the middle of the house. You missed the target because you had an emotional belief (probably negative) about the people you expected to buy your lowest-quality tickets. You may be right. That could be a true, rational, fact-based statement, but watch out! Judgments of that type about large groups of people, in my experience, are usually a smidgeon of truth, a dollop of myth and a lot of emotion.
So there you have it: Emotions should not be involved in pricing. Put on your green eye shade and channel Nate Silver. Emotions have a critical role in marketing overall. Just not in pricing. So don’t do it.
You’ll be glad in the morning …