Experience Higher Profits with Experiences

People are more receptive to a price increase for an experience than for a material object. A major reason is that people generally consider an experience to be more distinctive than a material object, and they’re willing to pay a premium for distinctiveness.
     A set of experiments at Universidade Catolica Portuguesa suggests that the distinctiveness can be portrayed to consumers in one or more of four ways:

• Limited opportunity. “You are here now.” “We are available now to provide this experience.” “You have the time for this experience now.” 
• Unique design. “This experience will be dramatically different from any other experience you’ve had so far.” “Each time you partake in the experience, we can make it different for you.” 
• Personalized design. “We will customize this experience to fit your characteristics and preferences.” 
• Counter-conformity. “This experience allows you to temporarily rebel against what others expect you to do.” 

     Prior research has found that people usually find greater happiness in purchasing experiences than in purchasing objects because experiences bring higher pre-acquisition savoring, more opportunities to share consumption of the purchase through joint participation, and more interest of others in hearing about the purchase. These subsequent studies verify how the difference in acceptance of price increases is due to the distinctiveness apart from the expectation of greater happiness.
     An implication of the findings is that you can ease resistances to price increases for objects by emphasizing the distinctiveness of the purchase. In a counterintuitive example of this, researchers at University of Texas-Dallas found circumstances in which you should raise your price on a particular item when the price on apparently equivalent items is lowered.
     One result of such a drop by a supplier of a high-prestige item is that demand increases for a substitutable item with a higher price. The logic goes like this for the consumer, perhaps at a subconscious level: “If the price is now lower, more people will be able to buy the item. This means the people in my social group won’t be as impressed when I show them I purchased this item. However, if I buy this other item, which carries a higher price, my purchase will impress others more because it’s distinctive.”
     Whether it is in selling experiences or material objects, you should respond to increased demand by raising the price. Not a huge jump, since it’s never a good idea to gouge, but a nudge upwards.

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Up the Experience Purchase Quality
Prepare Customers for Price Increases
Charge for Savoring
Raise Luxury Prices If Equivalents Drop Prices
Dip Your Toe Into Extreme Experiences
Encourage Customers to Pay What’s Right