Sales Training Moment #18 – How to Sell More by Loading Product With Price Options

Studies have shown that once you believe you own something, you will be more reluctant to give it up. This psychological attachment is known as the endowment effect which states that people will value a good or service ‘more’ once they see it as their own.

One example of this effect is highlighted by Barry Schwartz in his book, The Paradox of Choice, where he illustrates how to employ this strategy in sales by playing on people’s inability to part with what they perceive as their possession. In his example, two groups of car buyers were setup to be sold under different conditions to test the endowment effect.

Car owners in the first group were asked to buy a car that was fully loaded with all the features one could possibly want in an automobile. The owners were than told to go ahead and take off any of the options from their list before finalizing the deal.

A second group of car buyers were given the opposite task; they were given a car with no options and were asked to add the options they desired.

It should come as no surprise that the first group ended up buying cars with more options. Why? Once the car buyers in the first group mentally bought into their car and saw it as theirs, they were more reluctant to give up options which they would perceive as mental losses. The emotional cost of eliminating an option outweighed the price of owning the option, so they kept it.

For the second group, the endowment effect hadn’t taken hold because they didn’t ‘own’ the options; they had only committed to buying the unloaded car. This made it easier for the buyers to relinquish options. Every time they thought of adding an option they could objectively, not emotionally, decide whether or not the value of the option was worth the asking price. And, as the study shows, they ended up buying less options compared to the first group.

How can you use this in sales?

Let’s say you’ve been working with a client for some time now and they’re ready to buy. During the proposal or pricing stage, why not load it up with features or options and then let the client decide which of them they’d like to take off. This will force the client to make the tough decisions and you the salesperson won’t be seen as being too pushy. And, if they’ve fall under the influence of the endowment effect, you’ll also be shifting the price point upwards (e.g., the client keeps more options in). Here are some possible scenarios:

If you’re selling software with plug-in features, let the client decide what they don’t need instead of proposing what they should add. The more features that are left in, the higher the sales price point.

If you’re selling real estate, ask the buyer to describe their ideal, fully-loaded house and have them decide what amenities they could live without prior to looking at houses. If the buyer doesn’t eliminate many of the amenities, this translates into a search for a more expensive house and a bigger commission for you the agent.

If you’re in banking, list out all the account options and services your bank provides. If you get some push-back, ask the business owner what options he or she would like to eliminate. If necessary, and for maximum effect, explain what the business owner is giving up with each option. This reinforces the loss and minimizes the number of options eliminated.

Remember, the emotional impact of a loss (i.e., giving up something) is stronger then the desire for gain (i.e., adding something). A buyer, who takes mental ownership of a purchase, will hold on to more options (buy more) in order to minimize the pain of having to give something up.

Victor Antonio, Sales Influence

p.s., You may be thinking, “But doesn’t adding features give the client some sense of satisfaction? Why not add options instead of subtracting them?” A great question! Studies have shown that, in absolute terms, you will be more impacted by a loss versus a gain. For example, if you lost a $50 bill it would cause you more mental angst than the mental joy of finding a $50 bill. Think about that for a second!


One Response

  1. It’s all about the fear of lost, the take away. Great info.

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