Referant Price

Got My Snickers In A Twist

Humour me for a moment; I want to tell you about Snickers Ice Cream Bars. I heard about them over a year ago through a friend’s social media page. She posted a photo begging her local supermarket to stock them, having tried them elsewhere. A year later I tried one. Immediate convert.

You see, it looks just like a Snickers. But then you bite into it and the chocolate cracks – like a thinly frozen over lake. Your teeth sink into liquid caramel (how it stays cool and liquid is a triumph of modern food science) and as your mouth closes around the bar; refreshing cool ice cream flows over your tongue. It is at once familiar and exciting. On more than one occasion I have offered an unsuspecting friend a Snickers Ice Cream Bar and observed their euphoric reaction as they realize instead of nougat, they’re getting peanut butter ice cream. People… the product is a success

I can’t look at this image without hearing Ave Maria.

I can’t look at this image without hearing Ave Maria.

Now let’s talk about something called Referent Price. How much would you pay for an 8-pack of Snickers Ice Creams? Before knowing firsthand how good they were, I waited until they were on special before indulging. Normally retailing for about $7.50, I got them half-price for $3.75! Now, I had an excellent experience with the product, but in terms of a subsequent purchase, paying double seems excessive – even for the holy Snickers Ice Cream Bar.

Referent Price is the cost that consumers anticipate paying or consider reasonable to pay for a particular good or service. Evidently, my Referent Price has been set too low to pay full price for the product. This doesn’t mean it’s simply too expensive – after all I’ve paid over $3 for a single individually wrapped ice cream! But the psychology of having once paid 45 cents per bar and now having to pay 90 cents overwhelms even the highly positive associations with the product. Had the special price been $5, I may have still bought the product, and the non-special price would not have seemed so high.

Pricing is an art as well as a science and manipulating your customers’ referent price is just one of many things to consider when scribbling a price-tag or running a special.

– Jakub