Thursday, May 30, 2013

Envision Parity Pricing

Prescription eyeglass retailer Warby Parker has opened its first stores. A broad selection of the inventory is all priced the same, at $95. The tactic, called parity pricing, has served Warby Parker well in online sales.
     Decades ago, parity pricing was popularized by Swatch in selling their decorative watches. These days, parity pricing is often used by restaurants on dessert menus. Many diners hesitate ordering dessert. They feel full from having just completed their meal. They know desserts are a danger to diets. But if truth be told, they're hankering for dessert to the point of looking for an excuse to order it.
     Here's where the fixed price menu comes in. As research at Northwestern University confirms, consumers are more likely to purchase certain types of items when presented with a group of similar alternatives all at the same price. The reason is that parity pricing eases the decision process.
     Although the price fixe menu with alternatives for each course is more common in Europe than in North America, price fixe in the form of parity pricing is seen in at least a few restaurants everywhere you go in the world. What's of more use to you, though, for what you sell beyond restaurant menu items is that parity pricing significantly facilitates sales of many sorts of products and services.
     But only under specific circumstances. Parity pricing is most effective as a selling technique with items where the prospective buyer considers the purchase to be particularly risky. That might be because the buyer believes the price to be high, which involves financial risk. The Warby Parker use of parity pricing is notable in that most consumers consider eyeglasses to be a utilitarian rather than luxury purchase. Spending more money for designer eyewear can be justified by keeping the attention on the eyeglass instead of the frame.
     If the purchaser is aiming to get a distinctively expensive item—such as to show off to others or to feel indulgent—parity pricing can be downright frustrating. Warby Parker does offer some eyeglasses at above $95, and restaurant menus do include premium entrees and desserts. Still, when frugality is honored over frivolity, parity pricing could ease your shoppers' indecisiveness.
     Moving the indecisive shopper does sometimes seem to require a superhuman effort. Warby Parker might be an inspiration here, too. Their eyeglasses are due to appear in the upcoming “Man of Steel” movie.

Click below for more: 
Use Parity Pricing to Help Customers Decide 
Motivate Indecisive Shoppers with Brand Names

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