In this engaging episode, pricing strategist Claire Wang reveals the intricate psychology behind wine pricing. With over 20 years of experience, Claire explains how the perceived value of wine can influence pricing strategies. She discusses the importance of understanding customer preferences and how these insights can lead to more effective pricing decisions.
Claire also explores the concept of 'magic numbers' in pricing and how they can affect consumer perception. By examining different pricing tactics, such as using $18.99 instead of $19, she highlights the significance of creating a sense of value versus quality. Whether you're a winery looking to optimize your pricing or simply curious about the relationship between psychology and wine pricing, this episode provides valuable insights into the world of wine economics.
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Hi guys, I'm Claire, I'm a pricing strategist and for the past 20 years I have been pricing
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your everyday purchases such as insurance policy, mobile plan and foreign exchange rates.
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You might be thinking, what am I doing here on a wine show?
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Well, the thing is, wine has a lot of connections with pricing and how much you pay for a wine
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is determined a lot by the psychology underneath and today we're going to learn more about
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Well, first of all, I just want to say I love the energy.
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It's one of the reasons why I've got you on the show, even though your title is a pricing
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You've got an upcoming book called the price of influence, how to move anyone to a yes.
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Now you mentioned that you, for two decades, you've been helping businesses price their
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everyday phone plans, insurance, foreign exchange rates, et cetera, et cetera.
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Is pricing a sort of a, I don't, it's tough to, I don't want to say manipulation, but
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let's get into that a little bit.
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Definitely not manipulation.
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So I guess for many people, when they think about pricing, right, they think about, you
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know, putting a number on the price tag, you know, the, the number, what we call price
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point is normally the last point of a pricing process.
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And the very first stop of this process is we start by understanding who our customers
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are and what they really value.
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So the entire process of putting a price tag on a product or a surface is actually
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coming from that understanding of who we are serving.
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And once you know what they value, then it's easier to give them what they want.
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And when they get what they want, then it's easier to ask them to pay for a price that
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So it's kind of, you know, it's a very transparent process.
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It's nothing to do with manipulation.
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It's interesting though, when you see alcohol or just about anything priced at $699 or $599,
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you think the under price, you think the first number, you think the five or the six, you
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don't round up and think of the whole number, a lot of psychology going on here.
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I mean, you know, this is what we call the magic number of 99 and it's kind of a no secret.
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Everyone knows that even though you're paying $6, but $599 psychologically feels, you know,
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a bit cheaper and we do utilize that.
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And in fact, you know, when you price for a bottle of wine, like I seen in your previous
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episode, we're talking about $18.99.
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Why don't we just set $18?
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And I think it really depends on the type of product you are selling.
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If you have a product that is designed to tell people that this is a good bargain, this
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is a good buy, it has good value, then you will want to utilize that 99 too.
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So psychologically, it's a signal to customers that this is a bargain.
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But when you are selling a good quality product, then you will try to get rid of it.
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So when it comes to wine, you know, I think for a lot of producers, what they want to
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emphasize is actually on that quality part, in which case you will rather go in with $18
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or $19 rather than $18.99 or $19.99.
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So that's sort of, I wouldn't call that manipulation, but you know, it's kind of just like how our
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We naturally associate that with certain interpretation.
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So if a winery comes to you and is asking you, you being a price strategist, and they
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want to know a magic number, what would go into that whole process?
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Well, I would probably take a step back, right?
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You know, I would sort of ask the winery, who is your target customers who typically
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Because you know, like someone who would only buy wines from the supermarket will never
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go to, you know, like a wine shop and ask for a $50 bottle of wine.
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So once you understand what your customers want, then you can sort of give it to them
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And I think these days, with wine or with many other products, when customers buy your
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wine, they are not just buying the liquid in the bottle, right?
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And especially when you are paying like slightly higher price, you're buying the whole experience,
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the ability to share a glass with your families or with your friends, the, you know, if it's
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at a restaurant, it is the ambience you pay for, the glassware, they're just like so many
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different variables.
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So I think for a winery, you first need to sort of position yourself like where in the
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market you want to play.
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And then it all goes from there.
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If your target audience are sort of like high-end customers, you might want to package in a
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lot more things such as, you know, how can we make this experience better?
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Like the packaging, the design of the label, the paper bag that you use to carry that,
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the way it invites you in for like a testing from time to time, it's about building that
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sort of customer relationship as well.
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Obviously, if you're selling to supermarket, you wouldn't have the budget to run all that.
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Then it becomes, you know, how can we get our wine in front of like many customers and
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that we start talking about things like distribution channels or, you know, online marketing.
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So it all comes down to what you want to achieve.
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