I spent many years early in my career working in store operations for a major apparel retailer. One of the lessons I learned is the strategy for item pricing. The specific price tag on an item was deliberately designed to support an intended sales strategy. You've seen this, I'm sure. But you may not have realized why. For example, an item that should be priced at $30.00 will be tagged as $29.99 because the merchandiser thinks that they will increase sales to people who don't want to spend "over $30" for that type of item. You've seen the ads for "Now less than $30!". Or an item will be tagged at $45.00 and then the tag will be marked down to $28.00 in red. The actual targeted price was always $28 of course. But the mark down makes it look like a great deal.
So a previous post on tipping got me thinking about this concept in the hobby space: Do providers think strategically about how they set their prices? I'm not talking about the magnitude of her rate (i.e.: the 1st number in a 3 or 4 digit prices like 200 vs. 400). I'm talking about the last 2 digits, (the tens or ones). Could careful pricing drive more revenue without necessarily increasing number of sessions?
Some examples, and how they may have affected my behavior in past sessions:
1. Price is $300/hour. I'll usually bring an envelope with all 20's, or a mix of 20's and 100's.
2. Price is $325/hour. I'll usually bring an envelope with $340 in all 20's as ATM's usually don't dispense 5's and I'm not stopping at a gas station for change on my way to the location.
So by pricing at a rate that requires more than 20's or 100's to pay, I tend to round up to the nearest $20. Is that a tip? Sure it is. But did I do that because I felt the service was "above and beyond"? Well no, since I added the extra before I'd even met the provider.
So my question for clients is: Do you take the time to bring exact change?
And my questions for providers are: Do you think about pricing in rates that are not divisible by 20? And do you see any positive results from doing so?
Life is good
The Cat