But offering lots of options can destroy the buying experience.
I’m flying this morning. More accurately, I’m waiting in line after line after line at the airport. Once, I needed my boarding pass. Then I needed my boarding pass and driver’s license. Now, I need my credit card, too. Every line brings a new, extra charge. The check-in kiosk gleefully says it costs $15 for my first checked bag. At the gate, the little headphones cost me. On board, a pillow and blanket—once free free—now cost big bucks. And don’t get me started on the snacks.
Every price tag becomes a separate purchase decision. Every purchase decision makes an impression. The airline has me asking “Is this worth it?” a dozen times during a single flight. And every extra decision risks my deciding “No.”
Any good sales person knows you want your customers crying Yes, Yes, YES! As soon as I think No, they’ve lost me as a customer.
If you offer options, do it at once.
When you have lots of little add-ons that someone can choose up front, that’s fine. Call it “customization.” If I’m buying a new Mini Cooper, I get to run the Mini Cooper customizer. It becomes a game to choose the white racing stripes, chili pepper red paint job, fancy suspension, and cool hubcaps. Will I pay extra to customize? You bet. And since it’s a one-time fantasy fest, I only have to abandon common sense once to sign on the dotted line. Now I have my cool car with lots of options, and I love the chance to go into debt for life for my new tricked out Cooper. But only if it’s a single purchase decision, where the excitement happens all at once. One purchase, and I can enjoy my car forever.
Don’t take away what used to be free.
Of course, don’t customize add-ons that are expected as part of the base product. If I had to pay extra to make sure my Mini came with wheels, it would be annoying, not delightful. But since the car comes with wheels, all my attention is blissfully on my Speed Racer fantasies.
For Goodness’ sake, never start charging for something that used to be bundled into the price. People hate losing things. When once my plane pillow and blanket were complimentary, charging extra for them stirs resentment.
You might think airlines have to start charging for the extras or they’ll go out of business. Maybe. But maybe not. If they just tacked $50 onto the ticket prices and announced that they still give “free” blankets, pillows, and checked luggage, I suspect many people would be willing to purchase. All it takes is one nickel-and-dime experience to realize that a low price ticket might be a smokescreen for an expensive bundle of travel “add-ons.”
If airlines want to offer variable pricing, they shouldn’t charge extra fees. Instead, they could frame the choice as a discount: you get $7 off your ticket if you decline a pillow and blanket. More people would take the blanket and pillow (people often just accept the defaults), so the revenues would be higher. Yet those who really care can still get the lower price. Furthermore, people would be imagining their flight with all the goodies, and would be inclined to forgo the discount since it would seem like losing that amenity—and remember, people hate to lose extras.
How many purchase decisions do your customers make?
What’s your product or service? Do you offer it as a series of purchase decisions? Try an experiment: create an all-in-one pricing bundle and offer discounts for unused options, rather than extra charges for extra options. Track how many customers choose to the default options, how many customers purchase again, and how satisfied customers are with their purchase. You just may find that the best way to serve your customers is to charge them more.[Note: the way decisions are presented to people makes a huge impact in what they choose. This is called “decision architecture.” You can learn all about decision architecture in the book “Nudge.”]