Clients Measure Every Price Against the First One

Imagine a tutor named Felix Arden who prepares high school students for the SAT. His website says “Sessions from $95.” That is his price for 45 minutes online, which he offers for homework help. Most of his SAT students see him twice a week at home, at $1,600 a month.

Mrs. Lindqvist writes to him about her son, Jonas, who takes the test in March. She has looked at the website. Felix meets her and Jonas on a Thursday and recommends two sessions a week at home through February. “That would be $1,600 a month,” he says.

Mrs. Lindqvist looks surprised. “Your website says $95,” she says. Felix explains how a session at home differs from an online one. Mrs. Lindqvist listens, then asks whether Jonas could do the online sessions instead. Felix agrees, and she books one online session a week, at $380 a month.

Suppose instead that Felix’s website gives the price most of his SAT families pay. “Most students preparing for the SAT see me twice a week at home, at $1,600 a month.” Mrs. Lindqvist reads it before she writes to him.

At the meeting, Felix recommends the same plan. Mrs. Lindqvist asks whether once a week would be enough. “Once a week at home is $800 a month,” Felix says. “For a test in March, I would still do two.” She books two sessions a week, starting in October.

Felix offered the same tutoring both times. In the first version, the first price Mrs. Lindqvist saw was $95, so $1,600 sounded like a long way up. In the second, the first price was $1,600. So $800 sounded like a modest choice, and she weighed the plan against what Jonas needed, not against $95.

Your prices come in some order whether you plan it or not. Here is why the first price counts most, what a middle option does, and where arranging prices stops being honest.

People work out a number by starting from one in front of them

In 1974, Amos Tversky and Daniel Kahneman described three shortcuts people use to make judgments when they cannot be sure. People judge by how much something looks like a familiar type. They judge by how easily examples come to mind. When they need a number and one is already in front of them, they start from that number and adjust. Tversky and Kahneman found that these shortcuts save effort and usually work, but they lead to errors that can be predicted.

Here is the course’s view of what that means for your price. A parent hiring a tutor for the first time often has no figure of their own for what tutoring costs. So the first price they see or hear becomes the number they start from. Every price after it sounds high or low beside that one. That is why $1,600 sounded like a jump from $95, and $800 sounded modest beside $1,600.

So the first price a client hears should be the price of the work you would recommend to them. On a website, that is the price most of your clients pay, not the price of your smallest job. In a meeting, it is the one option that fits what the client told you. Say it first, and keep a smaller one ready.

A portrait photographer offered three collections, and clients chose the middle one

A portrait photographer who works as Twyla Dawn Photography wrote in Cole’s Classroom about changing how the studio sells its work. At first, the photographer sold everything at one all-inclusive price and was “only making $250 a session.” Once the hours of design, the session, editing, and delivery were counted, that came to less than minimum wage.

So the photographer set a session fee and a separate price list. The first list had three collections, each with products and digital files. “I noticed a trend,” the photographer writes. “Everyone was choosing my middle package, which was $400.” It included a 16×24 canvas and 10 digital images. The studio’s average sale in 2015 was $800, not counting the session fee.

The middle collection was the one clients took. So when you show three options, make the middle one the work you would most like to do for most clients. Price it at a fee you are glad to be paid. Then the option clients take most often is one that suits you both.

A wedding photographer built a top package to make the others look affordable, and couples still book it

Lara White is a wedding photographer who wrote for PhotoMint about whether to charge one price or offer packages. She offers five packages. One is a top tier “designed to make the other packages look affordable,” she writes, though “it still gets booked.”

Many photographers, she writes, use a “whopper package” in the same way. “It’s a psychological trick, but one that works.” Even so, she writes, many photographers find that about once a year a client comes along who “wants the very best you offer.” That client goes straight to the top package.

Her advice is to make the middle package the one you want to book most of the time. Fill it with the most popular coverage and products, “so clients are automatically drawn to it.” She also gives a rule for the gaps between packages. They need “very clear differences in price and offerings,” because packages that feel too similar leave clients “confused and discouraged.”

Measured against this lesson, White’s top package passes for one reason. It is real work she delivers, at a price she is paid, and couples book it. The reason she gives for it is the part to leave out. A top option built only to make the others look cheap is one you hope nobody chooses. So keep a top option only if you would be glad on the day a client picks it.

A middle option makes the step to the top a short one

Here is the course’s view of how a middle option helps a client who wants more. With only a small and a large option, the client measures the large one against the small one. That gap can feel wide. With a middle option, a client who wants more measures the top against the middle. That gap is shorter, and what the extra money buys is easier to see.

So say that step in a sentence, as what the extra buys. A personal stylist can say, “The season is $4,500. For $1,000 more, I shop with you for the trip to Milan as well.” That is a clear difference in White’s sense. The client can see exactly what the $1,000 is for, and decide whether they want it.

An option nobody chose changed what people bought, though later studies doubt the effect

Later researchers have questioned one test of a middle option. In 2013, Jenika, who writes the blog Psychology for Photographers, described a test by Dan Ariely with three magazine subscriptions. Online only was $59. Print only was $125. Print and online together were also $125.

No one chose print only, because the same money bought print and online. Of the rest, 16% chose online only, and 84% chose print and online. Then Ariely took the print-only option away. Online only rose to 68%, and print and online fell to 32%.

Jenika’s advice to photographers is to add a “useless” middle package of their own. Her example is five gift prints at $299, five digital files at $599, and both together at $599.

Measured against this lesson, Jenika’s middle package is the version to refuse. Nobody is meant to buy five digital files at $599 when the same money adds the prints. The package is on the list only to make the top one look like a bargain. That is where arranging prices stops being honest.

The doubt is about whether an option like that works outside a test. In 2014, Shane Frederick, Leonard Lee, and Ernest Baskin published studies on the question. They found that it usually did not appear when people tried the product, such as tasting a drink. It also tended to disappear when even one feature was shown as a picture, such as a photo of each hotel room. The researchers questioned whether the effect matters in practice.

Your clients see photos of your work, meet you, and often try the work before they book. Those are the conditions in which the useless option usually failed. So a fake option is likely to win you nothing, and it can still cost you a client’s trust.

Why adding an option nobody should choose goes wrong

Imagine a home organizer named Marisol Pike who reads Jenika’s advice one evening. She rebuilds her price list for kitchens before she goes to bed. The kitchen alone, in one day, is $900. A written plan for the kitchen and pantry, with the family doing the work, is $1,600. The kitchen and pantry done in two days by her team is also $1,600.

The next week, Mrs. Ashdown asks to see Marisol’s prices and reads the list at her kitchen table. “Who would pay $1,600 for a plan when $1,600 gets it all done?” she asks. Marisol laughs. “Nobody,” she says. “It’s there to show you what the two days are worth.”

Mrs. Ashdown goes quiet. Then she asks whether the $900 is there to show her something too. She asks for the two days at $1,400. Marisol does not want to argue after what she has just admitted, so she agrees.

Marisol’s two days were worth $1,600. Her mistake was showing a price she did not mean. Mrs. Ashdown heard that one price on the list was there for show. So she treated every price on it as open to bargaining. It cost Marisol $200. From then on, Mrs. Ashdown questions each price Marisol quotes her.

The version that works has a real middle option. Marisol lists the kitchen alone at $900 and the kitchen and pantry in two days at $1,600. The kitchen, pantry, and mudroom in three days are $2,300. She would be glad to do any of the three. “From what you’ve told me, I’d do the two days,” she says.

Mrs. Ashdown asks about the mudroom. “For $700 more, the mudroom is done too, so the coats and boots have a place by the door,” Marisol says. Mrs. Ashdown books the two days, and she asks Marisol to come back for the mudroom in the spring.

Choosing which price comes first is not a trick

Thinking about the order of your prices can feel like a sales trick, the kind a careful client sees through. Some price always comes first, though, whether you choose it or not. When Felix’s website said $95, it still gave Mrs. Lindqvist a number to start from. It gave her the wrong one, because $95 was not the price of the work Mrs. Lindqvist came for.

The honest line is the one White’s top package passed and Jenika’s useless package failed. Every price you show is a price you charge. Every option is one you would be glad to do at its price. Choosing which real price a client hears first is telling them what you recommend.

An option nobody should choose is the price list’s version of a limit made up to hurry the client. A client who notices it may decide the rest of your list is a sales line too, as Mrs. Ashdown did.

How to order the prices a client sees

1. Write down the first price a new client sees or hears from you. Check your website, your first reply to an inquiry, and your price list. For example, a coach might find “Sessions from $150” at the top of her website.
2. If that price is for your smallest job, change it to the price of the work most clients take. Say what the work is and what it costs. For example, the coach can write, “Most clients work with me for six months, at $9,000.”
3. In a meeting, say the price of the option that fits the client first. Keep a smaller option ready, and offer it only if the client says the first is too much. For example, a caterer can say, “For 40 guests, I’d do a seated dinner with two servers, at $9,500.” If the host says that is more than she planned, the caterer can add, “The same menu as a buffet is $6,800.”
4. If you show three options, make the middle one the work you would recommend to most clients. Price the top one so the step from the middle buys something the client can name. Then say that step in a sentence. For example, a travel adviser can say, “For $3,000 more, you’d have the villa with its own pool instead of the suite.”
5. Before any option goes on your list, ask whether you would be glad if a client chose it today at that price. If not, change it or take it off. For example, a florist who would not be glad to do a wedding for $1,500 takes that package off her list.
6. Show only prices you charge. Leave out a crossed-out “regular” price above the one you mean, because no client has ever paid it.

Next: You will see why the price you start a client at is the price you are stuck with.