Newspaper article The Evening Standard (London, England)

TRUST ME - THE PRICE IS RIGHT... Canny Businesses Have Perfected the Art of Making Customers Feel as If They've Got a Good Deal, as Philip Delves Broughton Reports

Newspaper article The Evening Standard (London, England)

TRUST ME - THE PRICE IS RIGHT... Canny Businesses Have Perfected the Art of Making Customers Feel as If They've Got a Good Deal, as Philip Delves Broughton Reports

Article excerpt

Byline: Philip Delves Broughton

RESTAURANTS are a lousy business. The margins are small, the inventory is short-lived and customers have so many options. A few scratch out a living, some do very well, but there are easier ways to make money. So one has to forgive restaurant owners a few tricks. Customers are wise to some of them: the highest margin wine is often the second cheapest because that's the one people gravitate to; the specials, which in the best cases are special products bought fresh that morning, are often cobbled together out of food about to go bad.

But the greatest tool in prising open the diner's wallet may be the design of the menu. Take the menu at the Wolseley. One's eye is drawn to the centre of the left-hand column, a box titled Crustacea. Halfway down are plateaux de fruits de mer to be shared by two people, one for [pounds sterling]28.50pp, the other for [pounds sterling]39.75pp.

At the bottom of the left-hand column is another box marked Caviar. One can choose 30g or 50g servings of Sevruga or Beluga. Prices range from the 30g Sevruga at [pounds sterling]55 to 50g of Beluga at [pounds sterling]195.

The menu is broken up into sections, and the text is mostly centered in each column, rather than set left, so that the prices do not form an intimidating column down the right-hand side. There are no pound signs. Only in the cheaper "starters and salads" section is there a column of numbers. But here we find examples of "bracketing", the same dish offered in different sizes, which encourages you to trade up even thought the smaller size may be adequate.

On the right, under "entrees, roasts and grills" is a box for "Steak Frites", which comes in two options, the 225g Rib Eye for [pounds sterling]21.75, the 200g Fillet for [pounds sterling]28.75.

With the crustacea, steak and caviar, the most expensive items on the menu, the Wolseley is offering options. The more expensive option anchors the price high, which leads diners to feel the cheaper one is good value.

It's a trick seen in luxury goods stores. The [pounds sterling]10,000 handbag is there to anchor a high price in customers' minds so that they think nothing of paying [pounds sterling]300 for sunglasses or [pounds sterling]70 for a money clip.

All of this pricing voodoo is explained in a terrific new book published in the US called Priceless: The Myth of Fair Value (and How to Take Advantage of It), by William Poundstone. It rattles through a century of economic and psychological research into how we think about prices, and how businesses can exploit us.

It begins with the indentation in the bottom of peanut butter jars, which allows peanut butter companies to sell less peanut butter while keeping the price steady and consumers happy. …

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