Pricing Fuck Ups. Lessons on taking the wrong approach to pricing. Ep04. Paying with credit card? Need to add 5% to your bill.

Family business in the Caribbean: a hostel for flashpackers.

Paying policy. If you wanted to pay with cc, you needed to pay an extra 5% because of “bank fees”. 🤷‍♂️ The closest ATM was not in town. Sweet, right?

Guests got **pissed**.

Approach

Used a “formula” that transferred the costs as extras for the customers. As if it’s their fault.

Guests feel they’re being lied to with the price, because it became an estimate (and needed to do the extra math at checkout). “What else will I get extra charged for?”

One thing changed

Swapped the order of things.

Rewrote the price including the +5% as the new price AND offered that if they paid in cash, they’d have 5% automatic discount.

Old price: $100 +5% if paying with cc. → Too much brain work.

New price: $105. Get 5% dsct if paying in cash. → I pay less!

What didn’t happen

Guests thinking the price was too high. They didn’t care. The market they were in was not that sensitive to price.

As humans, we LOVE to take things off if offered a discount. We HATE adding more money that was not planned ahead.

What did happen

Guests were thrilled. They now sought to pay in cash. Instead of them feeling dragged to ‘pay in cash’ and ‘too much work’, they were now seeking to get the discount.

Lesson

Make things about your customers. Why would they care that you get into “extra costs”? That’s your business. Find out what doesn’t make sense for them, be curious and see how to reframe the situation. It might be a problem. Or an opportunity.

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