«Eigentlich» Column: Is the promotional price the new regular price?

Anyone who buys today has only themselves to blame

When it comes to laundry detergent, many of us have long since learned that the next sale is sure to come. So we wait. It’s much the same with candy. And in the telecom market, new-customer discounts, special rates, and limited-time offers have almost evolved into a pricing system of their own. The official price is still listed, of course. But who actually pays it willingly anymore? This is where it gets interesting. Because promotions don’t just change the price we pay. They also change our perception of what a product should actually cost.

The exception becomes the norm

In pricing psychology, there’s a simple term for this: the reference price. We don’t evaluate a price in isolation. We compare it to what we normally expect to pay for that product. And we learn this expectation over time. Anyone who repeatedly sees a laundry detergent on sale at a 50 percent discount will eventually start to perceive that price as normal. It’s not the list price, but the promotional price they regularly encounter that becomes the reference point. Then something crucial happens: the regular price no longer seems normal. It seems expensive.

A promotion is actually supposed to create an extra incentive to buy: buy today instead of tomorrow, buy more than planned, or try a new brand. But when promotions keep coming around, consumers learn something else: it pays to wait. This whole phenomenon is taken to the extreme by promotional extravaganzas like Black Friday, Black Week, Cyber Monday, and whatever else they’re called…

Who actually raised whom?

Companies often complain about their customers’ growing price sensitivity. Maybe that’s true. But perhaps we’ve contributed to it ourselves. If you’ve spent years getting your customers used to the fact that laundry detergent is regularly available at significantly lower prices, you shouldn’t be surprised when they no longer buy it at the regular price.

When companies consistently sell cell phone plans at special rates, they create the expectation that the advertised price isn’t the price you’ll actually have to pay. And when companies constantly offer chocolate on sale, they eventually change people’s perception of what a bar should cost. This isn’t irrationality on the part of consumers. They’ve simply learned.

The short-term math adds up

That’s exactly what makes promotions so tempting. They work. Sales go up. Volume increases. New customers are acquired. Market share is defended. And, of course, promotions aren’t problematic in and of themselves. They can trigger trial purchases, generate short-term demand, or respond specifically to competitive situations. It becomes problematic when an occasional promotion turns into a predictable pattern. Because then it’s not just sales that change—the reference price changes, too. And with it, purchasing behavior. And at some point, the seller might even say, “Our product costs 20 francs.” But the customer has long since learned: No. It costs 12 francs. I just have to wait.” At that point, at the very latest, a company loses some of its control over its own pricing.

Maybe we're measuring the wrong thing

Of course, we calculate the benefits of a promotion. How much additional sales volume? How many new customers? What quantities? All valid points. But perhaps one question is missing: What have our customers learned about our pricing through this promotion? After all, prices can be changed in a matter of seconds. Price expectations cannot. And perhaps that is precisely where the long-term benefit of ongoing promotions lies.

… Actually

Promotions don't become dangerous because they don't work. Rather, they become dangerous when they work so consistently that the promotional price has become the regular price for customers.

Philipp Fessler Klaus Ammon and I have a combined total of more than 50 years of experience in consumer research and marketing research. During this time, we have seen many pricing methods emerge—and some disappear again. What has remained is the conviction that good pricing research never ends with numbers. After all, prices have not only a mathematical impact but also an emotional one. What matters, therefore, is not only what people can afford to pay, but also what feels right, fair, or valuable to them. Management Tools has been working precisely at this intersection of data, perception, and behavior for many years. Philipp Fessler Klaus Ammon and I have a combined total of more than 50 years of experience in consumer research and marketing research. During this time, we have seen many pricing methods emerge—and some disappear again. What has remained is the conviction that good pricing research never ends with numbers. After all, prices have not only a mathematical impact but also an emotional one. What matters, therefore, is not only what people can afford to pay, but also what feels right, fair, or valuable to them. Management Tools has been working precisely at this intersection of data, perception, and behavior for many years.