In a previous post, I discussed how a study found that people were very likely to find that a higher priced food item (in this case, wines) tasted better than one that they were told was less expensive. The finding in the study was that the brains of the test subjects automatically ascribed a better taste to the wines they were told were more expensive, even if they were identical. In that study, it was found that wines labeled “more expensive” generated a greater amount of brain activity than the less expensive wines.
This study begs the question: Does this psychological reaction extend to medicines? According to a study by the Journal of the American Medical Association, it does. For the study, the subjects were given placebo pain relievers. Some of the subjects were told that the pills cost $2.50 per pill and some were told their pill only cost a dime. The study found that “that the expensive pill reduced pain to a much larger degree than the cheap pills.”
This study once again reminds us that there is a definite psychological component to pricing. In determining the price for your service or product, you need to consider how that price will effect your audience. And what this study shows is that although you don’t want to price yourself out of a sale, you should not be afraid to possibly charge a premium for your service or product. The psychological and physical reaction to the price may be what makes the sale happen.