We would like to thank the Toronto wedding photographer Calin (www.bycalin.com) for his contribution to this article.
Factors Beyond Pricing
Whether you are a wedding photographer, an officiant, planner, videographer, Dj or limousine company, you need to understand how couples make purchasing decisions so that they can book you instead of your competitor.
Maybe the most important thing you need to understand is that couples make their purchasing decisions based on factors that go beyond pricing. Our article on pricing cues is just an example of a deep dive into the couple's pricing psychology.
Perception of Value is Reality
The most successful wedding vendors are not necessarily the best professionals for the ones who offer the best value to their couples. According to many wedding and marketing professionals, business success consists in projecting an image of value and reliability.
In itself, pricing Is not the definitive purchasing decision factor. Besides pricing, factors such as fairness, reference points, and the fear of loss are important elements in the couples' purchasing process.
Often we see wedding professionals who offer products and services valued at $1,000 if you buy a $2,000 service by a certain date. Such offers devalue the professionals services and while they might work in the short run, aggressive promotions hurt businesses over time as the marketplace forms a perception of low value when it comes to this particular vendor.
Promotions Cap Revenues
What we need to understand is that couples expect to pay certain amounts for services and they do not even dream of getting them for free. However, when they come across promotions that promise 35% off if you book by the end of the month, such couples take advantage of the sale price. Sadly, such desperate promotions hurt not only the vendor but also the competitors who now have to overcome a perception of cheapness, re-educate the couples and justify their seemingly high prices.
Promotions Proliferate Shopping Based Solely on Price
When the brides cannot differentiate between the quality offered by various vendors, pricing because the solely differentiating element. In fact, those services become commodities and the end result is a race to the bottom where everybody prices their packages lower so they can book the clients.
When enough professionals discount their packages, that gives couples the perception that the demand for wedding services is very low, which will reinforce their conviction that the price is the most important purchasing element.
That starts a vicious circle where the vendors and the client suffer. the professionals will offer high quality services will have to cut corners and offer cheaper packages to stay in business. As a result, even clients who have a large budget will not be able to find high quality vendors.
The Fairness Factor
If your best friends got married and paid there videographer $,3000 it would seem fair to you that you will pay a similar price. this is what experts call the fairness factor and it's a matter of perception.
For example, if your friends tied the knot five years ago, you cannot expect to pay the same price they did. You entrance in the wedding industry are known to charge lower fees for their services and gradually increase them over time.
Unfortunately, this pricing strategy results into a loss of the client referral base. If a new wedding photographer charged $500 for a full day of photography two years ago, chances are she is charging at least three times that amount or she would be out of business by now.
Still, if a bride who got married two years ago refers The same photographer to her best friend, the latter bride will be utterly disappointed when she receives a quote triple the amount she expected.
In this case, she has two options: if she really likes a photographer, she might go at them both her or the bride can look for a different artist in the same low price range.
Price Reference Points
The price reference point is the amount a client expects to pay based on her previous experiences with similar products and services.
Let's suppose you're a bride living in New York city who Is looking for a wedding photographer. You know that the average price of wedding photography in New York City is between $3,500 and $6,500. As such, even if you or originally allocated a larger budget to your wedding photography services, you will end up paying an amount between $3,500 and $6,500.
On the other hand, if it one moment in your wedding planning process a couple comes across a promotion from a New York City wedding photographer offers a full day of shooting for $1,500, the $1,500 becomes their new reference point. In this case the new pricing perception becomes the benchmark against which they will compare all the other photographers' packages.
Clients experience the sticker shock when the reference price of the product and service is significantly different from that charged in real life. In other words, if you expect to pay $1,000 for wedding photographer and the cheapest artist you can book cost you $2,000 you will experience the sticker shock.
Why is the concept of sticker shock important will wedding professional? The immediate result of the sticker shock is the client's decision to postpone the purchase.
Normal vs. Aggressive Discounts
Generally, customers expect discounts to range between 20% and 40%. A 20% discount is considered normal nowadays while a 40% discount is perceived as aggressive. Any discount outside this range are seen as unfair by clients and should be avoided.
Gift Cards and Credit Towards Future Purchases
If your wedding professional that expects recurring business from your clients, it makes sense to offer gift cards or gift certificates. The couples can use them for future purchases. Alternatively you could simply provide the clients a voucher that offers certain dollar credit towards future purchases if used by a certain expiration date.
Such gifts certificates, gift cards and credit vouchers increase the perception of value and help the professional grow her business. For example, if you are a wedding cake baker, you could offer your couple a $50 gift card anybody can use to purchase future cakes. of course, there are terms and conditions that need to be respected.
The cards usually have an expiration date and they should be used towards the purchase of a product that cost at least double the value of the gift card. In other words, a $50 gift card can be used to purchase a cake that cost at least $100.
According to pricing research, couples tend to spend more money for the same service or product when they use credit cards or gift cards when compared to cash purchases.
Even more interesting, when using cards, clients tend to forget those purchases more than when they use cash.
Gift cards are perceived as free money and customers tend to spend more for the same item when using a gift card.
Let's look at the bride A who just received a $300 gift certificate for a wedding photographers services. This bride's best friend (Person B) got married a few months ago and received the gift certificate from her photographer. Bride a has a $3,000 wedding photography budget but now she will spend $3,300 for the same services because she just received $300 for free.
This is a win-win- win situation: Bride A received $300 for free. Bride B received additional value and finally the photographer was able to book another bride at the relatively low cost of acquisition.
In the business world, the cost of acquisition is equal to the sum of the expenses a business incurs when acquiring a brand-new client. According to the Toronto wedding photographer Calin (www.bycalin.com) in the wedding photography industry, the cost of acquisition is about 10% of the package price. As such, it is normal for professionals to offer gift cards for friends and family as long as the value of the card does not exceed 10% of the average purchasing price.
If offering gift cards presents logistical challenges, a photographer can offer a free photo shoot voucher that can be used by the couple or their friends and family within one year from the wedding date.
The Psychology of Pricing. To Get People to Pay, Understand How They Think by Priya Raghubir, Harvard Business Review, September 21, 2017
Raghubir, P. and J. Srivastava. “Monopoly Money: The Effect of Payment Coupling and Form on Spending Behavior.” Journal of Experimental Psychology 14, no. 3 (2008): 213-25.