Substantial research and evidence exists to show that people are irrational about prices … and predictably irrational. Another study, this time in the hospitality industry, demonstrates this fact. Cornell University did a research study on menu pricing in restaurants. The key findings of the study include:
“The researchers cite a case where the names of restaurant menu items were changed to make them more exotic: The seafood filet, for example, became “succulent Italian seafood filet,” and red beans and rice became “Cajun red beans and rice.”
Sales of these renamed items with descriptions rose by 28% and were rated as tastier, even though the recipes before and after were identical. What’s more, diners were also willing to spend an average of 12% more for a menu item with a fancy name.”
The researchers found other interesting correlations as well. The point for all is that price is highly controllable by you and it is likely you are under-pricing your goods or services. Further, some simple actions on your part could gain you higher prices, increased sales and more profit, while leaving your customers happier. Sounds like a win-win to me.
What experiences have you had?