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« It (almost) always happens this way | Blog Home | Looking for trouble »

For a nickel

The current Fast Company reports that when Ikea started charging a nickel for shopping bags, consumption went down by 50% (95% in the UK).

Clearly, it's not the nickel.

The way you charge for something changes the way people perceive it. If the dinner special includes dessert, people get dessert because it's 'free'. Of course, it's not free. You paid extra for the special, remember?

A la carte pricing focuses your consumer. It forces them to make a choice in a spot where they didn't use to make a choice. It can highlight features that might have gone unnoticed (underbody salt removal treatment at the car wash, for example).

If you want people to notice a bit of consumption, charge for it. Even a penny.
If you want people to take something they had been leaving behind, give it away with purchase. Otherwise, they're wasting.

Here's one practical application. If you make something with low marginal cost like a CD, consider offering a second one (same title) for a nickel or a dollar. Why? Because if a customer buys a second as a gift, they've just helped you spread the word...

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Listed below are links to weblogs that reference For a nickel:

» The perception of price from Hardly Normal
In another great post by Seth today he references a Fast Company article that reports when Ikea started charging a nickel for shopping bags, consumption went down by 50% (95% in the UK). Seth commented “Clearly, its not the nickel. The way you... [Read More]

» Pricing - Your $39.99 Cellphone bill from Telecom Strategy
In his recent post, Seth Godin says this about pricing, "The way you charge for something changes the way people perceive it." So by charging the overage at a much higher rate, the mobile companies make us perceive that there is higher value in switchi... [Read More]

» Advice - 5 Cents from Atypical Virtual Associates
Interesting post by Seth G. over at the magical TypePad blog. It makes me wonder, as a service provider, how I could translate that consumption into real understanding for my clients and potential clients. Wait. I think there are definition issues in m... [Read More]

» Make Your Businesses Greener By Charging More from Business Opportunities And Ideas
Reading Seth Godins post For a nickel it occurred to me that many business could become more environmentally friendly by charging a little more - heres what he says: The current Fast Company reports that when Ikea started charging a ... [Read More]

» It's Not the Nickel from Mine Your Own Business
Seth Godin (Seth's Blog) points out that when Ikea recently started charging five cents for their shopping bags, consumption dropped 50%. Are Ikea's customers so destitute that they can't afford a nickel? Surely not. So, what happened. As Seth points [Read More]

« It (almost) always happens this way | Blog Home | Looking for trouble »