Flat-rate bias

“One of the most powerful tools of psychological pricing is the flat-rate bias. Consumers like flat rates, even when they cost more.” [1]

“Since the cost of any product is a loss, costs are less painful as flat rates. You pay once (per billing cycle) and don’t have to worry about it.” [2]

“The customer usually gets to choose the formula (“billing plan”). Taken at face value, price structures are generous. “If you’re paying too much for phone minutes, here’s a plan with unlimited minutes.” More options means freedom of choice, and common sense tells us that’s a good thing. Actually, the consumer is both hammer and anvil. Given that preferences are constructed from the choices presented, extra options can be manipulative. Offering an additional billing plan may cause the consumer to be willing to pay a higher price—or buy more—or both—than he would without the option.” [3]

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How many minutes do you use each month? How many movies have you watched? How many gigabytes are you using in your storage?

How much are you giving away as a customer?



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