June 15, 2019

The Popcorn Example

Sent by Jonathan Stark on June 16th, 2019

FYI - Are you working harder than ever but not getting ahead? Tomorrow (Monday June 16) is your last chance to join this session of The Pricing Seminar. If you’re ready to get off of the hourly treadmill, you might want to check it out: thepricingseminar.com

During the TPS warm-up exercises, one of the participants had this to say (shared with permission):


A long time ago when I worked at the movie theatre, management had decided to stop listing prices on all the popcorn and drinks.

As the cashier, I got nervous about this because I’d have to manage the uncomfortable conversations that would surely follow from people realizing what they had signed up for upon tallying up the bill.

When I asked my manager about all of this, his response was pretty much,

“People should simply go for what they want instead of worry about the price.”

At the time, I thought this was incredibly dishonest because we were essentially funnelling people to a point of commitment where it’d be too late to back out. The guilt of having had someone do all the work and would push the person to pay, albeit with a lingering sourness in the air.

However, there does seem to be an aspect of value-based pricing nested in there.

I can’t disagree with the idea that people should buy the absolute thing they’ll get.

I think the issue here is the sequence in which the information is presented to the customer.

I think in both our scenarios, the price reveal is a little too last minute as the deed has been done.

In most of Jonathan’s examples, the “hefty” price is alluded to in the beginning and presented during the proposal before any of the work begins.

I love this story because it encapsulates so many of the variables that go into a purchasing decision.

IMHO a price should be presented before the purchasing decision is made. In practice, there is some gray area here, though, because non-impulse purchase buying decisions are often made in stages.

In the popcorn example, I agree that the manager was being a little shady, especially if there is a long line. The buyer has to invest time to merely find out how much the popcorn is, so by the time they get to the register they have built up a sunk cost that they don’t want to abandon. They have already invested (time) in the purchase.

Also, this popcorn situation plays out in public in front of strangers and perhaps even a date which brings cultural norms into the equation. i.e., the potential buyer doesn’t want to look cheap in front of everyone by ordering popcorn and then having to say, “oh never mind” once presented with the price.

There’s also the cultural pressure to not hold up the line while changing the order last minute, or to ask for the price of everything while standing at the register and blocking everyone from their movie.

Here’s the thing...

All of these considerations - i.e., unpublished prices, sunk costs, not wanting to look cheap, and holding up the line - can come into play when selling your services.

If you haven’t thought about these levers before, here’s a suggestion:

Take a few minutes to think through your sales process and consider whether you’re using each of these things to best advantage for both you and your prospective clients.