The magnetic middle: your guide to pricing strategy
Written by Josh Ebsworth, Tue 25 July 2023
The Magnetic Middle Principle, also known as the Goldilocks Principle, suggests that pricing your products or services somewhere in the middle of the pricing spectrum can attract the largest number of customers. By offering a balance between low-priced and high-priced options, businesses can appeal to both budget-conscious buyers and those seeking quality and value. Here's a guide on how to implement pricing strategies based on the Magnetic Middle.
Avoid a race to the bottom
Our data suggests that someone over budget by 20% is just as likely to be booked as someone 20% under budget. What this tells us is that it’s not a race to the bottom in terms of pricing. It’s much better to be in the middle range compared to other partners. Our research has shown that clients primarily book partners based on their quality of service (both in offering, and customer service).
Create multiple pricing tiers
Offer various pricing tiers that align with the different needs and budgets of your customer segments. For instance, a basic tier for cost-conscious customers, a middle tier with balanced features, and a premium tier with added benefits like premium ingredients, extra portions or side dishes. Each tier should provide clear value propositions to attract specific target audiences.
Emphasise the middle Tier
Position the middle pricing tier as the most appealing option, focusing on its balanced value and affordability. Use persuasive messaging and visual cues to draw attention to this tier and encourage customers to consider it as the ideal choice.
Test and optimise
Continuously test and optimise your pricing strategy based on customer feedback and sales data. Monitor the performance of each pricing tier and make adjustments as needed to maximise customer satisfaction and revenue.
Bundling and upselling
Consider bundling complementary products or services to offer additional value to customers. Upselling can also be effective by encouraging customers to upgrade to a higher-priced tier with enhanced features or benefits.