Did the title get you here? Yeah – it was a good one and it's one of the strategies we're going to discuss below. Today we're going to briefly dive into "The Mind Games of Money" and decode the psychology of pricing.

We're constantly asked questions about pricing – which is why we talk about it every 6-8 weeks. This time we're going to dive deeper into one of our unconventional approaches on pricing, because beneath the surface of numbers and decimal points lies a fascinating world of psychology that can make or break a sale.

*To make sure we didn't overload you with information we limited our list to the three below.

If you want the full list and a one-time, 30min, complimentary consultation on how to implement one of these strategies in your business - text "strategy" to 888.572.2017.

The Decoy Effect: How Comparison Shapes Choice

Ever wonder why companies often offer three pricing tiers? It's not just to cater to different budgets—it's to guide your choice.

The Economist magazine once offered three subscription options:

• Web-only subscription for $59
• Print-only subscription for $127
• Web and print subscription for $127

At first glance, option 2 seems pointless. Who would choose print-only when they could get web and print for the same price? But here's the kicker: the presence of option 2 made option 3 seem like a bargain, significantly boosting its sales.

This principle, known as the "decoy effect," is used widely. Netflix, for instance, uses a three-tier pricing strategy that makes its standard plan seem like the best value, nudging customers away from the basic plan.

Anchoring and Framing: The Power of Context

The way a price is presented can be just as important as the price itself. This is where anchoring comes into play.

In a study published in the Journal of Marketing Research, researchers found that exposing consumers to a high anchor price for a product increased their willingness to pay by up to 50%.

Apple masterfully employs this technique. When they launch a new iPhone, they often introduce the premium model first, anchoring a high price in consumers' minds. This makes the standard model seem like a bargain in comparison, even though it's still a premium-priced product.

Charm Pricing: More Than Just Numbers

A study published in Quantitative Marketing and Economics found that using a $9 or $7 ending increased demand by more than 24% compared to a nearby price point. This phenomenon, known as "charm pricing," is so powerful that it even works when the 9 or 7-ending price is higher than a nearby round number.

While these psychological pricing techniques can be powerful tools, it's crucial to use them ethically. Manipulative pricing practices can damage trust and harm long-term customer relationships.

The key is to use these insights to better communicate your value, not to deceive or manipulate customers.

Understanding these psychological principles - as a barber - gives you a powerful toolset and an advantage in your industry. Brainstorm on which of the strategies we discussed best fits your current business model.

Remember, the goal isn't to trick customers into spending more, but to present your pricing in a way that accurately reflects the value you offer.

Feel like you know were to go from here, but you'd feel more comfortable with a personalized plan of action? That's why we're here! Text "strategy" to 888.572.2017.

The SBA (Small Business Association) reports that businesses conducting mid-year audits are 83% more likely to secure funding when needed. But in the barbering world, only 11% of barbers (via self or outsource) maintain, accurate up-to-date financials - and there’s no data on how many barbers actually conduct mid-year or annual business audits.

Mid-year is when common people slack or maintain - it’s also when the cream of the crop level up. At this crucial mid-year point, is your barbershop financially f[H]it or are you risking your future growth?

Think of your business as your car sitting in the driveway and business audits as the gas refills, oil changes, tire rotations, etc...To keep it running smoothly, you or a professional need to regularly perform maintenance. You don’t just drive your car and hope the tank magically gets refilled (even though that would be amazing). And if your brakes were screeching so loud that it was heard three blocks down the street, you wouldn’t just rock it out by blasting your stereo hoping the music drowns out the shrieks. No, you'd take it to a shop, allow them to run diagnostics and make critical adjustments. Well - guess what? That's exactly what your barbershop needs right now.

Starbucks, a company that knows a thing or two about consistent service, reviews its sales data weekly. Why? Because data doesn't lie. It can be manipulated to tell a story - but at its core - data doesn’t lie.

In big business it's recognized that three aspects majority of businesses lose money on are taxes, operations and marketing.

Taxes

I know, I know. Taxes are about as exciting as watching paint dry. But here's a statistic that might perk you up: The IRS reports that businesses that engage in mid-year tax planning can reduce their tax liability by up to 85%. That's real money back in your pocket.

Operations

Let's talk efficiency. Toyota's famous for its "lean" manufacturing process, which has helped them reduce waste and increase productivity by up to 30%. Now, you're not building cars, but the principle applies.

How streamlined are your operations? Are you wasting time between appointments? Is your booking system working for you or against you?

Marketing
Your marketing strategy should be tunnel-visioned based on system data. Did you know that Nike adjusts its marketing campaigns quarterly based on performance data? They consistently see a 40% increase quarter-over-quarter in campaign effectiveness as a result. What's the barber equivalent?

Have you set a marketing budget or are you just posting the same reels and videos as every other barber? Or are you just throwing money at social media ads and hoping for the best? I know maybe you're reaching out to influencers who have a large following and trying to tap in their market. Smart – you're in NC tapping into a FL market. It's time to double down on what has been proven time after time to work.

A mid-year business audit isn't just a feel-good exercise. It's a critical business move that can mean the difference between scraping by and thriving. Remember, you're not just cutting hair - you're running a business.

It's time to take a hard look at your barbershop, make the tough decisions and set yourself up for a killer second half of the year. Recently a barber out of Raleigh and I had a great conversation about the information I just told you. He owns three shops and said something that you may be thinking - "I wish I had the time to think about these things and the time to execute these practices."

In response to his comment, we created a Barber Business Audit Checklist. Text "audit" to 888.572.2017 to get started. Don't let another day go by leaving money on the table.​​​​​​​​​​​​​​​​ The clock's ticking. What are you going to do about it? Your move, boss.

Davian: Alright. So we just wrapped up an amazing session this morning. Thank you for the invitation. You mentioned this is the first time you guys did this. What was your inspiration?

William: I know they got great ideas. I know they got great vision of things they wanna do. And sometimes, as entrepreneurs, sometimes we get caught in our head on the ideas, but we don't put them down on paper. Right? And so I'm a fan of the Business Model Canvas because I utilize it myself as well whenever I just want to kind of brain dump and get these ideas out of my head. And I try to explain to them that even when you dump it, it's, like a living document.

William: So for those that are not familiar with the Business Model Canvas, it's 9 building blocks allowing you to break down your vision of your business - right - from the cost to deciding your customer segment to some of the channels you have to go through, how to reach them, as well as, some of the other activities to help make that business successful, and also understanding your revenue, but also understanding your cost as well.

Davian: Surprisingly enough, I've seen or you might have even heard of, a school doing something like this before, but it usually involves them building up their own mock barbershop.

Davian: You did a little spin where you kind of gave them free reign, where they could create any type of business model with any industry - not just the barber industry - why that?

William: I can't pronounce the gentleman's name who actually discovered the Business Model Canvas format. But I use it as part of my mentoring for other entrepreneurs as well. And, the main thing I wanted them to take away from it is that even though it wasn't a barbershop - as long as you understand the requirements to start a business it'll help you in your journey in being an entrepreneur.

William: The same fundamentals you need to start a barbershop, you can apply those same steps to start any business. So I allowed them to have the free reign to think of any business, in order for them to think outside the box, because the most important part, is that they understand how to use that tool. And the cool thing is that all the information they put down on the canvas, could be built and turned into a more traditional business plan.

Davian: There's something called cross industry practices (CIPs). So how one of the students presented on an amusement park and was figuring out how they can attract customers - some of those tactics can be translated into their barbershop or their mobile barber truck or whatever else they want try to create.

William: And I was super proud of them because some of them kept the businesses a secret. They didn't want tell me prior to presenting because they knew I would start giving them the 3rd degree.

William: I was very proud of them. They did exactly what I was hoping they would do - which is to allow themselves to be creative, allow themselves to be free - because when you're thinking about a business, it doesn't have to always be daunting. It can be, but, you know, we want to be able to tap into that creative space so you can really open up and think about everything.

Davian: Expectations. What did you expect them to come up with? And did they exceed that expectation or meet it?

William: They met it and some exceeded it as well. I say they all exceeded it because I'm surprised some even showed up and presented. I was thinking that they would use an excuse to take a day off. So, yes, they all exceeded it.

William: You know, again, we want them to know how to cut good hair, but we also want them to know how to run a good business as well. And that doesn't necessarily mean a full shop because those same principles apply, to your individual chair as well.