Lenny Rachitsky: uncertainty

Transcript context

…kind of things are around us, and we need to understand these. For instance, if you go to a movie theater, you'll see a small popcorn for $7, an extra large popcorn with butter on it. Huge one is $8. Most people will say, "For $1, I'm getting this extra large one, let me buy it." But that $7 popcorn is a decoy. I mean, if that was not there, most people would be scratching their heads saying, "Why am I paying $8 for popcorn in the first place?" Right? So this kind of behavioral framing and nudging becomes important, it's not about deceiving your customers, et cetera, but it's just about framing the products in such a way that it also appeals to the irrational side of the brain as much as the rational side. The example that I talked about in the SaaS product on the three products, and compromising to the 99, rather than going for the early product, is simply product discipline. Don't give too much away in your entry level product. Don't give the farm away your entry level product, at least reserve something for the $99 product. So if you build the packaging correctly, you can emphasize a compromise effect, and this is a well known behavioral theory where people avoid the extremes. If you are quality conscious, you'll go to the right. If your budget conscious, you'll go to the left, but most people will compromise in between. If you actually see your packaging mix is like this and is not the normal distribution, as in most people actually prefer the entry level product, you're giving the farm away, maybe you should think about how to change your features and benefits so that you can actually steer more outcomes towards a middle package compared to the entry level one, and also then charge based on the value that you're actually bringing to the table. So we have talked about many behavioral pricing strategies in the book, dedicated an entire chapter to this. Did you actually share a few of them? Just like some of these tactics that you find? I don't know if you have them in your head. Sure.…

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