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Pricing
Tactic

Sort Prices From High to Low

Customers adopt a higher reference price, which makes subsequent prices seem cheaper.

Three items priced in order from highest to lowest

Overview

Over an 8-week span, researchers alternated beer prices on a menu. They maximized revenue when prices were sorted from highest to lowest (Suk, Lee, & Lichtenstein, 2012).

Two beer menus. One sorts items from lowest price to highest price, while the other shows the highest to lowest price. The highest to lowest prices results in a higher average sale ($6.02 compared to $5.78).

Two reasons.

First, initial prices establish a reference price. Higher initial prices? Higher reference prices.

With low to high prices, the first three options are $4, so the reference price is $4. With high to low prices, the first four options are $10, $9, $8, so the reference price is around $9.

Customers use these initial prices to evaluate subsequent prices.

Second, there’s loss aversion. While scanning products that get higher in price, customers lose the ability to pay a lower price. They feel pressured to pounce on a cheaper item before they get too expensive.

Showing prices in a decreasing sequence can trigger the reverse effect. Each new product feels like a loss in quality. Customers feel pressured to pounce on an option before they lose too much quality.

  • Suk, K., Lee, J., & Lichtenstein, D. R. (2012). The influence of price presentation order on consumer choice. Journal of Marketing Research, 49(5), 708-717.