Imagine you are selling a basic product that also comes with an upgrade option:
- A 23-inch monitor that could be upgraded to a 27-inch model.
- A journey in a basic train that takes 10 hours could be upgraded to a premium train, which is only a 8 hour ride.
- A newspaper subscription available via web only could be upgraded to a web plus print version.
- Or a coffee that is served in a 8oz cup could be upgraded to 12oz.
Let us stay with the monitor example: the 23-inch version comes with a price of $199.99 and the 27-inch premium model is priced at $259.99. The question is how do you communicate the price of the premium version? Do you state the absolute price ($259.99) or should you present the price difference ($60 more)?
Allard, Hardisty & Griffin (2019) found that framing the price of the premium version as price difference is always superior to the absolute frame.
In all studies, consumers bought more often the premium version when the price difference was presented.
In the “monitor study”, 42% of consumers would choose the premium model when only the absolute price was present, but 58% (i.e. 38% more participants) decided for the premium model when the price difference was shown.
Presenting the price difference of the premium version improves up-selling probabilities (compared to absolute price only) even
- when the price difference is presented in addition to the absolute price of the premium version,
- the premium version is regarded a bad deal (given the price/quality difference to the standard version) and
- when the price difference is higher than the price of the standard version (e.g. standard price $30, premium price $70: $40 more).
Thomas Allard, Hardisty, David J., Griffin, Dale (2019), “When ‘More’ Seems Like Less: Differential Price Framing Increases the Choice Share of Higher-Priced Option,” Journal of Marketing Research, 56 (5), 826-841.