Pedro Piccoli Soares is currently Senior Executive Manager of AI Pricing at SIXT, a travel arrangement / car rental company that’s known to be a provider of high-quality mobility services. He mentors startups, and has an Engineering degree. He also has a purple belt in Brazilian jiu-jitsu.
In this episode, Pedro shares his knowledge when it comes to behavioral economics as he and Mark talk about how it works in relation to mental accounting and pricing.
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Why you have to check out today’s podcast:
- Discover why it’s important for companies to understand why they’re doing pricing and why they’re having a price change
- Understand why you should still be relative to your competitors’ price change even when they’ve already made the mistake of decreasing their prices
- Learn more about behavioral economics, its tactics, and its relationship with mental accounting and pricing
“We’ve mentioned several different effects of behavioral economics and several different examples of how they can be applied on real business. If you think about it, they were quite simple. It’s really easy to test these kinds of things, and they can generate some really nice benefits to your company, for sure.”
– Pedro Piccoli Soares
Topics Covered:
01:40 – The internship that led to Pedro’s shift from being an Engineer to doing pricing
03:09 – What Pedro loves about pricing that made him stay in it
05:34 – Why it’s important for companies to understand why they’re doing pricing and why they’re having a price change
07:38 – Being relative to competitors’ price change even when they made the wrong decision
10:20 – Talking about behavioral economics; what Mark doesn’t like about it
12:33 – Behavioral economics’ tricks: Pedro and Mark’s perspectives in relation to price endings in relation to mental accounting
18:49 – Discussion about what loss aversion is
20:38 – The use and importance of loss aversion, especially in business
23:23 – Behavioral economics and people’s buying decisions in relation to good, better, best
25:53 – Pedro’s piece of pricing advice for today’s listeners
Key Takeaways:
“This is when you kind of lose the sense of why you’re doing the price change. If you just follow your competition, if you don’t know the reason why you’re changing the prices, you can initiate a fight that in the end has no background or no reason to be happening. You are assuming that everything that they are doing is right, and that they know why they are changing prices. It might be the case, but might be the case that they are also doing something wrong and you’re just following them. You need to understand your customers and what price changes will affect them. You need to have a reasoning you apply when you’re changing the price.” – Pedro Piccoli Soares
“I totally agree that behavioral economics cannot generate as much value as pricing departments can generate. And it’s, on the other hand, a much nicer topic to talk about to show results. You can definitely play around and create experiments, and you can very easily show the results of a try, and it’s something that calls people attention because it’s actually behavior, and that’s something that they do as well, right? So, everybody wants to listen and to hear about heuristics, or the mistakes, the biases that they take when they’re making decisions. And that’s why I think it’s a topic that costs more attention than pricing.” – Pedro Piccoli Soares
People / Resources Mentioned:
- SIXT: https://www.sixt.com/
- Dan Ariely: https://danariely.com/
Connect with Pedro Piccoli Soares:
- LinkedIn: https://www.linkedin.com/in/pedro-piccoli-soares/
- Email: [email protected]
Connect with Mark Stiving:
- LinkedIn: https://www.linkedin.com/in/stiving/
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Pedro Piccoli Soares
So, we’ve mentioned several different effects of behavioral economics and several different examples of how they can be applied on real business. If you think about it, they were quite simple, right? It’s really easy to test these kinds of things, and they can generate some really nice benefits to your company, for sure.
[Intro]
Mark Stiving
Today’s podcast is sponsored by Jennings Executive Search. I had a great conversation with John Jennings about the skills needed in different pricing roles. He and I think a lot alike.
If you’re looking for a new pricing role or if you’re trying to hire just the right pricing person, I strongly suggest you reach out to Jennings Executive Search. They specialize in placing pricing people. Say that three times fast.
Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the irrational relationship between them. Our goal is to help you win more business at higher prices. I’m Mark Stiving, and today, our guest is Pedro Piccoli Soares. Here are the three things you’d want to learn about Pedro before we start.
He is currently Senior Executive Manager of AI Pricing at SIXT. He mentors startups. He has an Engineering degree like me, but he works in pricing. And he’s a purple belt in Brazilian jiu-jitsu. I’m glad I haven’t upset him yet.
Welcome, Pedro.
Pedro Piccoli Soares
Thanks, Mark. Thanks for the nice introduction.
Mark Stiving
Hey, no worries. It’s going to be fun.
So, let’s start on how did you get into pricing? So, you were an engineer. How do you get to pricing?
Pedro Piccoli Soares
Well, I would say it was kind of random.
So, my first internship while I was still in my bachelor degree studies, and I was doing an internship at Parker Hannifin. I think you might know this company. So, it’s really well-known for pricing strategies with Deep Brown. He’s really famous in the field. Well, I was back in Brazil, still, and I started as an internship together with my bachelor, so it was focused in the planning and production. So, I was in this department. And yeah, I don’t know. After a few months in the internship, they called me in the room. There was the Manager of Pricing for the Latin America, my boss, and someone from HR, and they said, “Yeah, we have this junior analyst position.” And I said, “Cool, which department?” And then they told me pricing. And I said, what the hell is this, right? So, I didn’t ever hear about that in the company before, and then they started to explain to me and they said, “Yeah, it would be really nice to have someone with your profile, working with us here in our branch.” And then, yeah, I joined the pricing team at Parker Hannifin. I think it was 2013. And I stayed there for six and a half years. Then I went to HEINEKEN, FlixBus here in Munich, and now it’s SIXT, so, yeah.
I would say initially, it was a bit of a random choice for they offered me and I wanted to have this challenge and try it, but then of course, afterwards, it was kind of a love relationship, right?
Mark Stiving
Yeah.
So, what do you love about pricing? Why do you stay in it?
Pedro Piccoli Soares
I really like to see the impact that you can make in customer decision making, and how you can – at the same time – do a lot of great stuff for the business and improve the company in not only profitability but also when you have, let’s say, overcapacity, you can also play with that and decrease prices, increase demand, or the other way around.
So, during complex situations, for example, during COVID, I think for most companies, at least, when I was working at FlixBus or at SIXT, pricing department was the most important one. How do you deal with this very low demand or very low unexpected demand when you don’t have time to plan your capacity properly, right? It’s something that was unforeseen. And yeah, I think pricing plays a huge role on that, and it’s really nice to see this kind of impact that you can generate.
Mark Stiving
Yeah, and I think the problem is equally important now, since everybody seems to have supply constraints, and we can’t get enough product, and inflation’s taken off. So, how do we handle that in a pricing company?
Pedro Piccoli Soares
Yeah, I think this was something we already saw last summer. Thinking about the travel industry or the transportation industry, the demand was already picking up last summer, so there was a really, really low cases in terms of Corona in Europe. I think US was similar. And then, yeah, demand was picking up again, but the steel companies were not prepared to fulfill all of this. And also, if you think about the car industry, you also have some micro shift prices playing a role there. So, pricing is really like on the core of how the company will perform during these periods, right?
So, I think this analysis that we’re always doing, checking the demand on a regular basis or forecasts that we use to try to predict how the demand will change, and then of course, when doing price changes, what do we want to achieve with that, right? So, we want to promote our most premium products, we want to retain our customers, we want to get the demand for short term or for long term users, and this kind of thing. So, I think that’s a lot of opportunities that you can play around only with pricing, which might seem a little bit simple, right? But if you look in the background in the company and see how it works, it’s crazy. I mean, there’s huge departments of pricing, depending, of course, on the type of company. So, if you go to airline industry, it’s crazy how many pricing managers, yield managers these companies have, right?
So, it’s a big deal in the end.
Mark Stiving
Yeah. So, one of the things that I heard you say just now, which I dearly loved – I’ll dig a little bit deeper on this – and you said the words, we need to know why we’re doing a price change, why we’re doing pricing. And it feels to me like most companies don’t really know the answer to that question. They just want to do a price increase. Talk about how you learned that, or why you think that’s so important.
Pedro Piccoli Soares
Yeah. So, I think that most cases, as you said, I mean, companies, maybe smaller ones or that they don’t have like a structured price department, they might do these kinds of things. Maybe, if you have a cost increase, you just pass this cost to your customers, and this is like your way of pricing, let’s say, or you just follow competition, and this is when you kind of lose the sense of why you’re doing the price change, right? Is this something that the market really expects? Is this something that my competition’s doing to undercut me? Should I just go down with them or not?
So, this is also one of the cases, I think, we were briefly discussing before, that can generate price wars, right? So, if you just follow your competition, if you don’t know the reason why you’re changing the prices, you can initiate a fight that in the end has no background or no reason to be happening, right? And that’s also the case, for example, thinking about price wars or price changes, that if you’re just following the competition, you are assuming that everything that they are doing is right, and that they know why they are changing prices. It might be the case, but might be the case that they are also doing something wrong and you’re just following them.
So, you need to understand your customers, right? And what price changes will affect them. So, if I increase prices, will this affect my demand? If not, how much can I increase? For which type of products do I have this elasticity where I can play around on both ways, right? So, this is not only for price increases. You can also decrease prices, make sensing a lot of times to find the products where you are charging too much or you have a hidden demand that you can gain through decreased prices. And then you have a reasoning to change prices, right?
Mark Stiving
Yeah. Absolutely.
Pedro Piccoli Soares
So, whenever you enter into discussions, you need to have a reasoning you apply when you’re changing the price.
Mark Stiving
Yeah. Let me address something that you just said, which I find fascinating, and maybe we slightly disagree, but I have a feeling we don’t.
You said when our competitors lower their price and we just randomly or just follow them, we could be starting a price war, and maybe they’re making a bad decision, right? Maybe they’re making the wrong decision, and so, we shouldn’t do that. But one of the things I often think about is if my customers are deciding between my product and my competitor’s product, it doesn’t matter if my competitor was stupid when they lowered their price. They lowered their price. And so, if I want those customers to still choose me, I have to be somehow relative, hopefully a little bit higher-priced and selling more value, but I still have to be relative to them, even if they made a stupid decision.
Pedro Piccoli Soares
Yeah, of course. I mean, I totally agree, and I don’t think we should, let’s say, ignore competition completely, right? That’s definitely not what I’m saying. And it really depends on the market that you are, right? So, if you’re thinking about the beer industry, where you just go to the supermarket, in the shelf, and you have all the products right there to you with their prices. Usually, some customers are really price sensitive, so if your competitor made a mistake and decreases prices, it’s very likely that he will get the demand, right? But two things-
Mark Stiving
Yeah. Go ahead.
Pedro Piccoli Soares
Oh, I’ll say, two things that play a role is that for how long will they stick with this mistake until they find out that this was a mistake? So, if it takes too long, maybe you will also need to react, right? And in the end, also, if your customers will change or not. So, you also need to know if your customers are really, let’s say, loyal to your brand. It really depends on the case.
If we think, given the example of where I worked, with Heineken, in some markets, there are really a lot of loyal customers that are loyal to the brand, and at the same time, there is this brand differentiation. So, it’s supposed to be a premium product, Heineken sponsors, Formula One sponsors, the Champions League. So, you also have this differentiation or this creation of values, you can also call it, right?
Mark Stiving
Yeah. So just to make sure all the listeners are thinking through this with us, let’s pretend for a second that Heineken, because of the brand name or the loyalty, their customers would pay 20 cents more than the competitor. And so ideally, we want to price at 20 cents higher than our competitors or 19 cents or somewhere in that ballpark. If my competitor lowers their price by 10 cents, now I’ve got a 30-cent price premium. Even though I still have that premium, I may lose a lot of business, because customers are only willing to pay 20 cents more. So, I’m completely with you. And by the way, I’m super jealous that you got to work in the beer industry.
Pedro Piccoli Soares
Yes. It’s definitely a nice job there.
Mark Stiving
Hey, let’s talk about behavioral economics. You’re going to be speaking to PPS coming up, as am I, and your topic is going to be behavioral economics. And I just love thinking about and talking about behavioral economics, but before we jump in, let me tell you what I don’t like about behavioral economics. Is that fair?
Pedro Piccoli Soares
Yeah, sure.
Mark Stiving
So, I think we split. I, personally, in my mind, split the world of pricing up into two sides. And so, for the sake of arguing, I’m going to call them rational and irrational. Another way to think of that is value and behavioral economics. And I spend most of my time and energy thinking about the value side. How do I get the value messages across? How do I get people to sell value and create value? But that’s not to say that I don’t like the behavioral economics, because I think it’s a lot of fun and really fascinating.
So first off, do you disagree with my thought?
Pedro Piccoli Soares
No, I think I would say that it will always be a combination of both, right? So, there’s one, let’s say, I would say the core part of it should probably be value, right? But you also have some tweaks that you can make with behavioral economics.
Mark Stiving
Okay, so I didn’t actually say what I don’t like about behavioral economics, so here it comes. Ready?
Behavioral economics is more fun and it gets more attention than the value side of pricing. That’s what I don’t like about it.
Pedro Piccoli Soares
Yeah, I think I understand your point. And I mean, I just got into this field of behavioral economics more recently, so just as you mentioned, I have much more experience with pricing, value-based pricing, how can we use better pricing strategies to make more profits. But I think that I totally agree that behavioral economics cannot generate as much value as pricing departments can generate, right? And it’s, on the other hand, a much nicer topic to talk about to show results. You can definitely play around and create experiments, and you can very easily show the results of a try, and it’s something that calls people attention because it’s actually behavior, and that’s something that they do as well, right? So, everybody wants to listen and to hear about heuristics, or the mistakes, the biases that they take when they’re making decisions. And that’s why I think it’s a topic that costs more attention than pricing, let’s say.
Mark Stiving
Yeah. So, let’s talk about some of the aspects for some of the behavioral economics’, let’s call them tactics, not tricks. How’s that? We’ll call them tactics.
Pedro Piccoli Soares
Yeah, okay. Yeah.
Mark Stiving
And one of the things that I always find is I sometimes find myself getting caught into some of these tactics, and it’s just like, oh, no, no, no, step back, don’t do that.
Pedro Piccoli Soares
Yeah. Exactly, yeah.
Mark Stiving
So, what do you think is your favorite behavioral economics tactic, or let’s say, the most powerful?
Pedro Piccoli Soares
Well, it’s complicated to say what is the most powerful. I think that there are a lot of things that you can play together, right? I mean, I will tell you the one I don’t like, maybe, first. But I think that, for example, the price ending is something that became something really popular and everybody does it, and for me, in the end, it doesn’t make a lot of sense, right? So, if you go to a supermarket, everything will end with nine cents. And if you think a bit, in the end, it’s senseless, right?
Mark Stiving
Pedro, I have to tell you. My doctoral dissertation was on price endings.
Pedro Piccoli Soares
Okay. I mean, it’s a nice topic, but everybody’s doing it. I don’t know when you did your PhD. Maybe a while ago, right?
Mark Stiving
Long time ago.
Pedro Piccoli Soares
Yeah, exactly.
Mark Stiving
So, the truth is, first off, let me tell you why it works, if that’s okay, and then it makes all the sense of the world that everybody should be using nines as their price endings. Almost everybody; there are some exceptions.
The reason it works is because we’re lazy subtractors. And so, if we’re trying to compare two prices, we usually subtract the prices, and if it’s easy to subtract the prices, then we do exactly that, but if it’s hard, so if I asked you to subtract 72 from 57, you’re like, “Yeah, that’s like 20 cents. Okay, got it.” And you wouldn’t be very far off if you made that estimate. But if everyone’s going to look at my price as 52, then why wouldn’t I just make it 59 and get the extra seven cents?
Pedro Piccoli Soares
No, I totally agree, and I know it works. It’s not the point. But I think it’s like the silly one that people fell into this trap, let’s say, or in this tactic, right?
Mark Stiving
Yeah, it is nowhere near as powerful as many of the other behavioral economics tactics.
Pedro Piccoli Soares
Yeah. Something I really like – it’s related to mental accounting, right? So, if you have a business that you can sell different products, or you have different touch points with the customer, it also changes a lot. So, if we’re thinking about air flight industry, so if we’re selling the seat, and then another touch point with a user, you offer them an upgrade, it might be the case that they are more willing to spend because they already paid their ticket on their mental accounting. So, this phase was done. Now, it’s maybe another month already, and then they are more willing to pay for this upgrade, or to book a seat or extra luggage and so on, right? So, there’s different touch points and how mental accounting works. It’s really interesting.
Mark Stiving
Yeah. So, on the first purchase, they’re thinking, “I have to buy a ticket”, right? So, what’s the price? And I may not want to pay the full price of a first-class ticket or something like that. But after I bought the ticket, someone sends me a note that says, “Hey, wouldn’t you like to fly in comfort for this much more?” It’s a very different thought process.
Pedro Piccoli Soares
Yeah, exactly. I mean, in the end, it’s the same thing. You will pay the same value, maybe even more if you’re buying this upgrade afterwards, right? But the way that we, people, when you usually count the money, or how they spend the money, it’s a bit different, right?
There’s also one effect on how we spend money over the course of the month that people tend to spend more in the beginning, just because you have more money in your account. Even though you’re going to survive the whole month with the same amount of money, when you receive your paycheck, “Okay, let’s go out for dinner”, and then in the end of the month, I don’t know you’re eating sandwiches at home, no?
Mark Stiving
Yep.
Pedro Piccoli Soares
It’s also something that doesn’t make a lot of sense. It’s behavioral. But that’s how people do it.
Mark Stiving
Yeah, absolutely.
And so, one of the things I find fascinating is the behavioral economics researchers come up with a lot of these effects, right? So, the mental accounting effect, the endowment effect. And what I don’t think we do a good enough job as pricing people or economics people are listing all of the uses of that, right? Where are the places we can do that? I thought you came up with two really good examples for mental accounting, but I think we ought to think through more of those.
Pedro Piccoli Soares
Yeah. I mean, I think I saw one example. I don’t remember which industry it was, food industry or something from retailers, and that they would use these different types of discounts across the course of the month, right? Just with this example that I gave that people tend to spend more in the beginning of the month. I think it was something, maybe Burger King. I don’t remember. But that they would give some sort of a volume discount at the beginning. So, I don’t know. You buy two, you get one extra for free, because you have more money, and they want to get a larger share of this revenue that you have. And then in the end of the month, they would work with percentage discounts. So, you have less money in your pocket, you’re less willing to spend, and then 10% discount if you buy one or half a burger. It’s already fine.
Mark Stiving
Yeah.
Pedro Piccoli Soares
Right? So, it’s also one way of playing with this behavior of spending more money in the beginning of the month and less in the end of the month. So probably, there’s also some differences or narratives, I don’t know, but yeah, I don’t remember exactly the case, but it was something like this. I think it’s also a good application on it.
Mark Stiving
Yeah. So, what do you think of the ads when someone’s trying to sell you something, and they say, “it’s less than a cup of coffee a day”?
Pedro Piccoli Soares
Exactly. This is also something like, it’s kind of a behavioral economics things, right? So that you have always like the lower price you can offer or that you can display, and then in my mental accounting, it’s like $1 per day, it’s fine, but if I had to pay 30 per month, it would be very too much to spend once, right? So, this is also something really interesting.
And people buy it, right? They think it’s a good deal, even though it’s the same thing, or even worse than it was before. I don’t know. Maybe before creating this policy, it was $15 and all this. Okay, let’s just try one per day, or communicated as one per day and people will think it’s better.
Mark Stiving
Yeah, absolutely.
So, describe for the listeners, what is loss aversion?
Pedro Piccoli Soares
Well, this is how we feel about losses, and that we tend to feel them more, right? It’s also related to the behavior of how we feel, for example, if I ask you what would you prefer, like, to get 900 euros for sure or 1000 with 90% of chance and 10% of not getting anything. So, the expected value is the same, right? But in this case, you are gaining the money, you will probably go for the certainty and take the 900 for sure.
But if you go the other way around and ask you if you want to lose 900 or get 1000 with 90%, you would prefer the risky option because you don’t want to lose. You want to have this tiny possibility of not losing anything, because it’s better. So, you prefer to maybe lose 1000, but have this small chance of not losing anything, because we don’t like to lose, right? We want to keep what we have.
And I think loss aversion might be also a bit related to the endowment effect that you mentioned. So, we tend to value more the things that we have. And if we want to sell something that is already ours, we will always value more than the market and or the other buyers. I think it’s a bit in this relation, right?
Mark Stiving
Yeah. And so, Kahneman and Tversky always use the words losses loom larger than gains. And in my mind, I can’t not say those words, so I just had to say them.
Pedro Piccoli Soares
Yeah, exactly. I think it’s a great field of study. I really like to go into these topics, not only from Kahneman and Tversky, but there’s also an elderly, I think. He’s a really nice guy. I mean, he has some really nice experiments to check. And also, Richard Taylor. He’s like the Pope of the area, maybe.
Mark Stiving
Yeah, a lot of them are pretty fascinating.
So first off, let’s toss out a couple examples of loss aversion and why that’s so important. Do you have one? You want me to throw one out first?
Pedro Piccoli Soares
Yeah. I mean, I mentioned, for example, this with money, what would you prefer? Like, to lose or, right?
Mark Stiving
Yeah. I meant in business, right? Something that we could do or use.
Pedro Piccoli Soares
Okay. Yeah, this is a bit tough. I mean, I don’t think I ever thought about any usage of loss aversion.
Mark Stiving
So, let me give you something you can chime in here.
Pedro Piccoli Soares
Yeah, sure.
Mark Stiving
So, one that I love – this is just fabulous – is if you have two products, one’s expensive and one’s less expensive, which one do you present first?
And here’s what happens. If you present the less expensive one first, you describe all the features, you say the price, someone’s put that in their mind now, and then you say, “But you can get these additional features for this additional price.” So, the additional features looks like a gain, the additional price looks like a loss. Losses loom larger than gains, so it’s harder to get people to buy that. Whereas if you present the more expensive one first, and then you say, “But you can get this other one if we take away these few features at this lower price,” now the price is a gain, the features are a loss. Losses loom larger than gains, so therefore, people are more likely to buy the more expensive one.
I just think that’s a fascinating example.
Pedro Piccoli Soares
Yeah, exactly. I mean, people, we have really good imaginations, right? So, when we are already checking the products, we are already considering how we would feel with these products, and how would we feel if we had these products, right? No matter what we are buying. And if we start, let’s say, removing features or removing benefits of this product, we’ll already feel it as a loss.
I think there’s one, also, really good example, which is related to, let’s say, you have a product, it’s also related to the features or adding new features that you can check. “Okay, I also want this. I want this extra and these other extra.” So, I think the example I read was related to pizzas. So that, you have like the dough, and you can click and add all the ingredients or the extras you want, right? And if you pre select everything, when you show to your customers, they need to remove what they don’t want, and they will usually keep more extras or more toppings than the ones that need to select exactly what they want. That’s because once you have already selected, you believe, “Okay, this is already everything I have. Okay, what do I really don’t want? Otherwise, I will keep it,” right? “I don’t want to lose any of these features or these toppings that I already have.”
Mark Stiving
Yeah, I think that’s a fabulous example, Pedro. I love that one.
Pedro Piccoli Soares
And you can apply this really simple in business.
Mark Stiving
The one piece of behavioral economics that I teach a lot of, I mean, it’s the one technique that I think is very, very useful, and that is when we build good, better, best product lines. And there’s no real good reason for that, other than behavioral economics. It simplifies decision making so people don’t have to know everything about everything. But the real issue is, people buy the one in the middle, because they’re afraid of making a mistake, right?
Pedro Piccoli Soares
Yeah, exactly.
Mark Stiving
They don’t want to buy the cheap one, because it might not be good enough. They don’t want to buy the expensive one, because they might be wasting money. So, they buy the one in the middle. And I just find that fascinating.
Pedro Piccoli Soares
Yeah, exactly. There’s also the term of adding one ugly brother. It’s also similar. So, you just create one product, which is a worst version or a more expensive version compared to the one you actually want to sell, and then you just make the comparison easier, right? So that people can just see the two options and say, “Okay, this is definitely worse than this one, so this is what I want to take.” And with the extremes, it’s kind of the same thing. You just want to avoid these mistakes, or you want to avoid the extremes as they call it, right? So, if you just go for the middle, it’s probably the best option. And this is something, there are several studies, like proving how effective this is, right? So, how people actually change their behavior when you have, like, your best, good, better rate, and also this ugly brother version of your product. But this is really interesting.
Mark Stiving
Yes. So, I’m not here to call the ugly brother. I understand what you’re saying. And usually, we call it the decoy effect. I’ve seen about that. And so, if you guys are listening, you want to look up, I think it’s the economist example that Dan Ariely writes about, as the best example there.
Pedro Piccoli Soares
Yeah, exactly. But aside from the Dan Ariely, also with the economist, and I think he mentioned other experiment that he did with pictures of students from the university that they needed to choose who would they like to date, and then he will have two pictures from different students in the middle, he would create one ugly version of one of them, and then they just make the comparison easy. So, you will just compare the two that are the same. So, the ugly one and the, let’s say, the normal one, and then you go for the normal one, because yeah, but you just make the comparison easier. When you have two different people, we have so many different characteristics that it’s harder to compare. And if you have just two similar options, one, which is clearly worse than the other, you make the choice easier.
Mark Stiving
That is pretty fascinating.
Pedro, this has just been a ton of fun so far, but we are running out of time.
Pedro Piccoli Soares
Okay.
Mark Stiving
Let me ask you our final question. What’s one piece of pricing advice you’d give our listeners that you think could have a big impact on their business?
Pedro Piccoli Soares
Wow, okay.
We’re just talking about behavioral economics. I think that this is one really nice topic to be explored. So, if you never heard about behavioral economics inside your company or in your market, you can definitely start searching of it and thinking about these topics we discussed and how to adapt them to your market, right? So, we’ve mentioned several different effects of behavioral economics and several different examples of how they can be applied on real business. If you think about it, they were quite simple, right? It’s really easy to test these kinds of things, and they can generate some really nice benefits to your company, for sure.
Mark Stiving
Yeah. I think we should all be thinking about things like behavioral economics. And by the way, this is no different than thinking about what kind of marketing message you’re going to deliver, right?
Pedro Piccoli Soares
Exactly.
Mark Stiving
You want to deliver the message that puts your product in the best light and people think good things about it. And we can do the exact same thing with pricing and packaging.
Pedro Piccoli Soares
Yeah, for sure. It’s really related to communication – communication of value and communication of different price strategies. Yes.
Mark Stiving
Yeah. So, Pedro, thank you so much for your time today. If anybody wants to contact you, how can they do that?
Pedro Piccoli Soares
Yeah. They can contact me directly via my LinkedIn. It’s Pedro Piccoli Soares. But you can also share the URL. Totally fine.
Mark Stiving
Yep, we’ll have the link in the show notes.
Pedro Piccoli Soares
Alright.
Mark Stiving
Episode 166 is all done.
Thank you for listening. If you enjoyed this, would you please leave us a rating and a review? And if you have any questions or comments about the podcast or pricing in general, feel free to email me: [email protected].
Now, go make an impact.
Mark Stiving
Thanks again to Jennings Executive Search for sponsoring our podcast.
If you’re looking to hire someone in pricing, I suggest you contact someone who knows pricing people. Contact Jennings Executive Search.
