The Psychology of Options Pricing

Dan Ariely authored one of the best books I read in 2009 entitled Predictably Irrational. In this brief clip from his TEDtalk he demonstrates the powerful effect of options pricing. Ironically, the subject is The Economist magazine and they completely missed the opportunity to display their pricing prowess. They blew it! Big time!


  1. Or, maybe they didn’t blow it all, Ed.
    And, they knew exactly what they were doing and achieved the subscription types they wanted.
    Until you speak with the right people at The Economist … don’t assume you know their motives.

  2. Thanks for the comment, Ric. You are right I do not know their motives, but I assume profit to be one of them.

    If that is true, THEN, they really blew it because for no additional cost they could have moved 50 percent more people to the higher priced offering.

  3. Well, here’s another way to look at it …

    They ensured that subscribers took the printed version as well as the electronic version through the pricing structure they created.

    This then meant that there was an abundance of printed, hard copy magazines of The Economist sitting on coffee tables in offices all around the place.

    This then created mass exposure (to clients and customers of those subscribers) which then created even more interest by new subscribers who would have never seen the electronic version.

    By making the pricing approach guarantee the take up of the hard copy, it created a viral effect in attracting new subscribers.

    I subscribed here in Australia because a client legal firm had The Economist in their reception area and I grabbed the subscriber card out of the centre and sent it off!

    Voila, a new subscriber. And, so it goes.

    I think it was very, very clever! They were thinking of the fifth sale, first.

    All the best, Ed.

  4. Hmmmm.

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