What ACTUALLY Makes People Buy Things (Pricing Psychology Explained)

0:00 In this video, we are going to talk about the psychology of why people buy.

0:04 Every single day, whether you shop online or shop in real life,

0:07 you are inundated with tricks from $9.99 is a dollar value to sample

0:12 packs to marketing tailored specifically to you without you even knowing it.

0:16 And all these are tools in any brand or marketer's

0:19 toolkit that they can use to better perform in their business.

0:22 It's also things that every consumer should

0:24 be aware of so you understand how you're

0:26 being sold to and more about why you make the decisions you make when consuming.

0:30 In this video, we're going to walk through pricing

0:32 strategies that will help your products sell more and give

0:35 examples of how pricing and product tie together

0:38 to form brand strategy in all kinds of different niches.

0:41 And then we're going to dive into personas,

0:43 how to break your customers into specific segments and give value propositions

0:47 right to them and look at the technology stack to do that effectively.

0:51 This is a super tactical video you can actually apply

0:54 in your marketing career as a brand or really in any business.

0:57 But as always, my video is really rooted

0:59 in the sociology and psychology of why we buy,

1:02 why we think, why we consume, and why we love the brands we do.

1:05 I hope you'll have fun no matter what your background is.

1:07 There is a super comprehensive free download

1:10 that comes with this you can grab below.

1:12 It includes how to build personas, all the pricing tactics,

1:15 even info on things like how to connect in your social strategy.

1:18 And in the first week of May, our next community call.

1:20 Any questions you have, you can come dive in.

1:22 There's a link to that below as well.

1:24 Let's lock in.

1:24 So, first I'm going to speed round through five pricing psychology techniques.

1:28 And then we're going to get into some examples of how

1:30 brands structure their product mix to take advantage of these.

1:33 So, the first concept is anchoring.

1:35 The first number that someone sees on a page

1:38 reframes every number they see after it.

1:41 This is why you will always see when someone sells you something in software

1:44 or similar that they will have tiers of a high anchor on the right,

1:48 a mid-tier in the middle,

1:49 and a low option that often mostly exists to make the center feel justified

1:53 or to get someone to buy in to later upsell them into the other tiers.

1:57 This is all about making the product

1:59 feel reasonable by strategically pricing all three.

2:02 And then retail does the same thing.

2:04 Luxury stores don't stock a $900 candle cuz they think you're going to buy it.

2:08 They do it to make the $200 candle seem affordable.

2:11 And the anchor doesn't have to be your product.

2:13 It just needs to be in the frame.

2:15 In a bit of a gray tactic, Kint does this by actually listing the typical retail

2:20 price that they position against with their lower price.

2:23 And you'll see retail structures a lot like this.

2:25 Best Buy will go in.

2:26 You'll see almost every category they have.

2:28 Headphones, washers, TVs, have a good, better, and a best.

2:31 Someone who just wants the price option can get the good.

2:34 the best sells a lot rarer but helps anchor the price

2:37 of the middle and the middle tends to be a big selling category.

2:40 Now let's talk about price as a quality signal because this is a big one and one

2:43 I've had a hard time learning in my career

2:45 but people don't have perfect information about product quality.

2:48 If you saw my videos in prior weeks where I talk about Kashmir,

2:50 you'll know that 100% Kashmir can mean completely

2:53 different things but still have the same label.

2:55 And so on e-commerce it's almost impossible to tell.

2:57 This is why brands will use price as a proxy.

3:00 You may think that your brand you want to offer people a deal.

3:02 You're going to give them an excellent product at an excellent price.

3:04 But the problem is the perception based on price

3:07 may be that your product isn't actually excellent.

3:09 So a lot less people will even make the choice of buying it to understand.

3:12 I look at this in streetear.

3:14 People always ask, "How do these brands sell $400,

3:16 $500 shirts?" In fact, as someone who sells $80 shirts,

3:20 I'll get a lot of people that will say that seems too expensive,

3:22 $80, $100 shipped, but they're better quality shirts than the $500.

3:26 But the boutique owners and the buyers especially

3:28 will go it's a sign that something is

3:30 of a specific level of designer or a specific

3:32 level of value just to be priced in that range.

3:35 Of course it's a tellier.

3:36 Of course it's not a blank

3:37 and the positioning any lower than that you're actually

3:40 lowering the customer expectation and you may

3:42 never even get a chance to exceed it.

3:44 And this makes sense.

3:44 This is a reasonable heristic in a world

3:46 where people can't try everything before buying.

3:48 Price things in an expected way and know that underpricing

3:51 is a brand problem not just a margin problem.

3:54 Then we have charm pricing and rounded pricing.

3:56 So $9.99 versus $10.

3:58 The difference is 1 cent,

3:59 but the psychological difference is actually much bigger.

4:01 Prices ending in nine consistently drive higher volume.

4:04 This is true in mass and value categories.

4:07 But in premium and luxury categories, the opposite is true, the rounded number.

4:10 Basically, the $10 says,

4:11 "We're not trying to trick you into thinking that $9.99 is a good deal.

4:14 We know you're smarter than that." You will see

4:17 that play out in a lot of luxury versus value brands.

4:19 And at the same time, you have what we call lost price points.

4:22 $69.

4:23 There's a reason why everything is $59 or 99.

4:27 If you go all the way up to $79, you might as well be 99.

4:30 69 is so much more than 50.

4:31 You're looking for a 49.

4:32 There's little things in there we'll notice and people gravitationally pull

4:36 towards some of these price points that make sense for them.

4:38 So, now let's get advanced and let's talk about pricing

4:41 as it relates to product and what different products do

4:43 to fill in the consumer experience as a full product

4:47 mix or how all the products in a brand work together.

4:49 We'll get some concrete examples.

4:50 So, for instance, when you go into an ESOP,

4:52 you'll notice they have affordable products, $27.

4:54 You can get a hand soap in the store.

4:56 It's really expensive for a hand soap, but it's cheap for ESOP overall.

4:59 This is what we call an entrylevel product.

5:01 It gets you into the ecosystem.

5:03 It's low risk.

5:03 It's high trial.

5:04 They want to make sure you have a banger for that low that lowric product.

5:08 So, they want to then buy more cuz they had a good experience with it.

5:10 And then you'll get the core product,

5:12 the thing most people actually buy, the real business.

5:14 So for ESOP, a lot of that is $60 to $100 skincare,

5:17 expensive premium skincare, an actual repeat business that people buy into.

5:20 And then you'll have aspirational SKs,

5:22 dream pieces that sell very little that help

5:24 anchor the brand and move everything else.

5:26 If you've ever gone to a brand page and there's a lot of denim and shirts,

5:29 but they have a $2,000 jacket.

5:31 That's an aspirational skew.

5:32 And then for ESOP, they have $200 kits and fragrances.

5:35 Position ESOP as a luxury,

5:37 not just a nice soap by really getting into higher price points.

5:39 And they don't even take full advantage of this the way

5:41 some of the brands that we're going to talk about do.

5:43 And with them, that store experience kind of helps close the deal, right?

5:46 And then we'll go into Halo products.

5:47 These might not even be for sale.

5:49 So, for instance, Palace had a car that they put inside their shoot

5:52 they listed for, I think it was like 40 grand or something.

5:54 You actually buy the car.

5:55 District Vision when they launched cycling at a $10,000 bike.

5:58 It'll be like a one of one.

5:59 No one may even buy it,

6:00 but it exists to define the ceiling of what the brand could be.

6:03 And all of these work in concert to build an effective product mix.

6:07 And you'll notice if you build out

6:09 your core product and you have success with it,

6:11 you begin playing in some of those other

6:12 categories ends up driving more sales of the core.

6:15 One of the perhaps legendary examples is this when

6:17 uh Oreos started doing all these legendary collabs, right?

6:20 Where they were doing Swedish fish Oreos, crazy flavors, Lady Gaga Oreos.

6:25 And what they found from the data is those collabs sell

6:27 like a little bit or the flavors sell like a little bit,

6:29 but they drive way more sales of the mainline Oreo.

6:32 They bring people over to the shelf.

6:34 They get people talking about the brand and they might laugh

6:36 and buy a vanity product once but they buy more Oreo overall.

6:40 Apple and they execute this to a te as you would expect.

6:42 Entry level the iPhone SE the AirPods low barrier and you're in the ecosystem.

6:46 Then you have the core their iPhones

6:48 the MacBooks the Airs the majority of the product.

6:51 The Neo for instance is a new entry level for them.

6:53 Then you have aspirational the MacBook Pro the pro displays.

6:56 People buy a lot of the aspirational products but they're not for everybody.

6:58 It positions Apple as a professional tool you're

7:01 buying into even if you get your Air.

7:02 And then the Halo is stuff like the Vision Pro.

7:04 It exists to say that this is the future and they're investing in it.

7:07 It makes a $1,600 phone feel reasonable whether the Vision Pro works or not.

7:11 Over in luxury, we got the Ro Piana.

7:12 Entry level $400 to $600 cashmere accessories,

7:15 scarves, beanies, small leather goods.

7:17 They sell a lot of these.

7:18 People want to buy into the brand, but they can't afford the core.

7:20 The core is frankly ridiculous.

7:22 $1,500 to $3,000 sweaters and outerwear.

7:25 It's for very few people.

7:26 There's a lot of people that will flex their way up to that one beanie or scarf,

7:29 a pair of shoes even.

7:31 And then aspirational, you have the gift of kings wool,

7:33 the $12,000 jacket that just exists to help anchor the $3,000 products.

7:37 And you don't need luxury prices to do this.

7:39 Glossier is another great example.

7:41 Their brow product at $18 gets someone in.

7:43 Skincare at $35 keeps you.

7:45 And then they upsell into fragrances at $75, makes them a brand.

7:49 They do many things.

7:50 You can live their experience.

7:51 And so a lot of brands make one of two mistakes.

7:53 One is they build too many too quick.

7:55 First, you need to build your core.

7:57 get something people want to buy and then hit some

8:00 walls before you start thinking through all these other things.

8:02 Or the second is they only build the middle.

8:03 They only build that core.

8:04 There's no entry point to help easily acquire new customers

8:07 or they only do that entry point with sale on core.

8:09 And there's no aspirational tier.

8:11 Nothing to anchor your prices against.

8:12 Nothing to for people to believe there's something bigger.

8:14 And if you take this approach in any level,

8:16 whether you're a designer, whether you're a marketer,

8:18 you work at a brand launching your own

8:19 product and or whether you're just consuming,

8:21 you now understand the ladders of how you engage.

8:23 But now to really put this into impactful tactical

8:27 stuff that will help you crush it at work, I want to talk about personas.

8:30 So what do I mean by that?

8:31 I mean by the customers of your brand fall into categories.

8:35 They fall into groups based on similarities

8:37 of their demographics like their age,

8:39 their race, their location, and their habits.

8:41 How they buy, how they consume online, what they listen to, what they follow.

8:44 By understanding those personas, you can better craft messaging.

8:47 You can better design products.

8:49 You can better look at collaborations and marketing and content.

8:52 It informs everything.

8:53 And so, traditionally, what would happen inside marketing companies,

8:56 and I've been a part of this process a hundred times,

8:58 people would map those personas out on like a whiteboard,

9:00 list them out with a marketing agency,

9:02 do this big exercise, but they would mostly be made up.

9:05 If they did get data, they would go and they'd pay for surveys, right?

9:08 But you got to understand, the only people that actually do a paid survey

9:10 for a brand are generally one type of customer.

9:13 And even if you got those couple thousand, it's just so heavily skewed.

9:17 And people really rely on that data.

9:18 and you'll see people that are really in touch with the consumer,

9:20 the street team or the marketing or people

9:22 on social or customer support be like,

9:23 "It's not quite right." But now you can get way more tactical.

9:26 So, one of my absolute favorite pieces of software, not a sponsored video,

9:30 just something that I use and believe in that I'm trying

9:32 to get them to let me invest in is called Outer Signal.

9:34 So, what this does, it goes through your customer base in Shopify or your email

9:39 list and basically builds your personas for you based on the actual data.

9:43 So, when I found this, I was using it for something different.

9:45 So, one of the other things that they do

9:47 is they just analyze your customers as they come in.

9:49 So, for instance, if I got 133 orders,

9:51 like you'll see inside the screenshot in the last 7 days.

9:54 It will tell me, okay, seven of them are ultra high net worth,

9:57 six of them are influencers, three are industry experts,

9:59 two are relationships to me or the team somehow,

10:02 two of media or content businesses,

10:03 and it'll actually give me their information.

10:05 So, this is a great tool for actually

10:07 hunting down influencers to represent your brand

10:08 or make your UGC content cuz they probably already have them in their customers.

10:12 That's how I found the tool.

10:12 But now what we use it for a lot more is these segments.

10:15 So for instance, this brand is broken down into high performance executive,

10:19 affluent health investor, wellness professional,

10:21 athlete, biohacker as a key personas.

10:23 And it shows the percent of their customer base.

10:25 14% of their customers are high performance executives,

10:28 10.8 are affluent health investors, etc.

10:30 It also shows the difference in their LTV,

10:32 their lifetime value, how much they buy for you.

10:34 This matters.

10:35 This is where you start to get into the sweet

10:37 spot of what you can do with messaging.

10:38 How often do they repeat?

10:39 That all gets put inside this data set.

10:41 you can actually build your real personas out.

10:43 You can say this is the real data

10:44 from our customers online or from our email list.

10:46 So related to cloud workflow,

10:48 I want to talk about granola who I've partnered with on this video.

10:50 If you're in a lot of meetings,

10:51 you probably use your AI notetaker or have someone on the team that does.

10:54 And a lot of times you'll find

10:55 that what you've actually done with that goes nowhere.

10:57 So I use Granola to connect my meeting

10:59 notes to my real workflow and it's been invaluable.

11:01 So let's talk about it.

11:02 Granola is an AI notepad that transcribes your meetings

11:04 in the background without a bot joining the call.

11:06 No weird robot participant in Zoom.

11:08 If you've been in my cut 30 chat, you've heard playing jokes about that.

11:10 but it listens directly off your computer audio across

11:13 every platform or on your phone for in person.

11:15 You can jot a few notes if you want it,

11:16 fill in everything around them or you do nothing.

11:18 You come out with clean structured notes, action items,

11:20 and a searchable record of the whole conversation.

11:22 But the part that changes my workflow is the MCP integration with Claude.

11:25 Granola connects directly in Claude,

11:27 which means your meeting notes become live context inside

11:30 of it that you can ask in any chat.

11:31 You can reference it or you can just pull up the notes.

11:33 You're not hunting for it.

11:34 You don't switch tabs.

11:35 You'll hunt down a transcript and copy paste it.

11:37 It is there.

11:37 Claw knows what's discussed and there's an there's

11:39 a connector there and there's a chat GBT app.

11:41 I just happen to use Clawmore and they're both for granola.

11:43 Once you set this up and give it permission, there's a super easy process.

11:46 You can just query your chat,

11:47 bring up the date or the topic that was discussed, it's going to find it.

11:50 It's super useful for bringing up things

11:51 in the past you only have light context for.

11:53 Remember when we were talking about that photo shoot

11:54 or what was the plan for the social post?

11:56 I even use it to suggest video ideas for me

11:58 personally based on conversations I've had throughout the week.

12:01 What were interesting topics?

12:02 What did I talk about?

12:03 What were questions people had inside my Zoom calls?

12:05 The meeting feeds the work instead of just sitting in a folder somewhere.

12:08 So, somewhat unrelated,

12:09 but I want to shout out their use of a spoon as corporate merchandise.

12:11 Clever.

12:12 You can try Granola for free at the link below.

12:14 And thanks to them for sponsoring this video.

12:16 And so, now what do you do with that in the modern era?

12:18 So, a couple things.

12:19 Because this is based on email,

12:20 you can segment your email and SMS communications and software like Claio,

12:24 whatever you use to actually send different messages

12:27 to those people based on what they do, especially based on that lifetime value.

12:30 If you have a category that only buys once and doesn't buy again,

12:33 specifically work on targeting them to increase that LTV over time.

12:36 If you have people that buy from you all the time,

12:38 you're not marketing to them a lot, market to them more.

12:40 Can you build that LTV out way higher by being more active?

12:43 Those are the kind of things you can test.

12:44 And used to be with personas, you have to then brainstorm what the angles are.

12:47 One thing I love and I include in the guide

12:49 that you can get in the free download, I have my prompt for this.

12:51 Bring this into claw.

12:52 Bring all the information from your persona.

12:54 It's this person.

12:55 They have this income.

12:56 They're from these places.

12:57 All the information you can download or get.

12:59 put it into a cloud project.

13:00 Use the prompt that I have

13:01 that basically describes how to create marketing copy.

13:04 It's designed to create marketing copy.

13:05 And what you do with this with this specific project,

13:08 which again is a collection of the information about the persona,

13:10 any brand or product materials you can add

13:12 in, and then the core of this this prompt

13:13 is basically the project description that you're a copywriter

13:16 who thinks a certain way like a certain marketer.

13:18 You can adjust any way you want.

13:19 Now, you can do three things.

13:20 You can write copy for your landing pages,

13:23 your emails and SMS, and your ads based on this.

13:27 That's number one.

13:28 Number two, you can design the messaging for your products

13:30 overall to be in tune with your customers.

13:32 And then three, you can decide how to segment.

13:34 Because just because you have four or five

13:36 personas doesn't mean you need four to five messages.

13:38 Ask the allseeing cloud Oracle, what message would appeal to multiple?

13:42 What messages should we segment when we're

13:43 launching a product that has this value proposition?

13:46 How does this message stack up against competition?

13:48 And it will research it.

13:49 Now you're able to do just like actual interesting marketing.

13:51 So what do I mean by the copy that we get to in the front?

13:53 So every e-commerce experience and also every experience

13:56 of buying a high ticket product or a service

13:58 or from an agency or a piece of software

14:00 comes down to the ad that gets the person there.

14:03 So what is the content you put in front of them?

14:04 What are the messages you can test?

14:06 What are the pain points people have?

14:07 Ask that claw project for these people's pain points relative

14:10 to your product that's going to give you ad ideas.

14:12 But most important is the landing page.

14:14 They land somewhere where you have to sell them with the copy.

14:17 A headline, a sub headline, some bullet points on why they buy,

14:20 some frequently asked questions, maybe a video.

14:22 And doing that by persona is going to work way better because guess what?

14:26 The wellness professional that we saw inside this here

14:28 who's buying something for their job is very

14:31 different than the biohacker who's trying that same

14:33 wellness product because they want to work on themselves.

14:36 And if you have two separate landing pages for those and the messages are great,

14:39 your conversion rate is going to raise.

14:40 And guess what?

14:41 Writing that copy with something like this, putting it into a platform,

14:44 you can do landing pages inside of most email providers.

14:46 You can do your landing pages directly in Shopify.

14:48 There's software like Replo and Vermont.

14:51 You can do it in like in Framer if you have an agency website,

14:53 whatever it is, just spin up another lander.

14:55 It's a quick thing.

14:56 Once you build one lander, you can and you already have your placeholders

14:59 for your copy and for your images.

15:01 Just duplicate it and swap it out with the new

15:03 ones and you will raise your conversion rate.

15:05 And the last one is the emails.

15:06 You're sending out a new campaign.

15:08 You're doing an automation sequence.

15:09 You can build segments based on these personas automatically.

15:12 And so you may have someone who needs more touches.

15:15 They need more touch points to sell or someone who needs a longer form message.

15:18 Again, the professional versus individual consumer

15:20 is one of the most blatant ones.

15:22 That's not even that's a just a huge persona rift

15:24 of I'm buying this for work versus I'm buying this for me.

15:27 If you can segment your email communications with different

15:29 messages around that, it's going to perform better.

15:31 This combination of all the pricing and all

15:34 the techniques you can use to price a product,

15:35 how those products stack in a mix,

15:37 whether that's software, whether that's a consumer good or food,

15:40 even a service offering, it's the same exact thing.

15:43 What's your entry-level $99 audit?

15:45 Really, I want you to end up buying the $1,000 monthly package.

15:48 Then do I know who my customer is and do I make messages for them?

15:51 This is the time in our world where you used to have such deep

15:54 expertise in research and copy and messaging and marketing to do this and you

15:59 can do an amazing B+ job with a combination of software tools

16:03 and some basic street smarts that will

16:05 accelerate your career or accelerate your brand.

16:07 I would not lose that opportunity.

16:09 So again, this is all broken down inside

16:11 a really thorough doc you can get for free

16:13 below and there'll be a webinar at the end of the month to discuss all of it.

16:17 I would be stoked to have you there.

16:19 Uh any questions you have on brand building, etc.

16:21 we can dive into.

16:22 I appreciate y'all watching and there is a guide to yapping coming next week.