Relative search cost and search goods . Relative search cost
refers to the financial and non-financial costs, relative to the purchase price, that a buyer must incur to determine the differences in functionality and benefits between different purchase alternatives. Here, the purchase price is essential. For example, spending 10 minutes comparing two products worth €5 may be an excessive relative search cost, however, spending 2 hours comparing two products worth €5,000 seems reasonable. “ Search goods ” are those in which we incur a search process (with its associated relative cost) and in which we can determine the differences between two or more alternatives before purchasing without having to incur a high relative search cost. This is the paradigm of goods that we can buy online . In this type of product, the price at&t email list communication must be directly related to the product’s functionality and the benefits it will bring to the user . Examples of these items are consumer electronics products (laptops, digital cameras), cosmetics and some financial products, for example. Below we see the price communication of a search good by K-tuin Experience goods A second type of product is the so-called experience goods . The relative search cost in these cases is higher, since these are goods in which the differences between functionalities and benefits are not obvious and require a longer period of testing and analysis. Some examples of experience goods would be consulting services, professional software or education. In these cases, instead of explicitly linking the communication of the price with the functionalities and benefits of the product, the aim is to minimize the risk perceived by the buyer and maximize the communication of the potential benefits. In this sense, some of the resources to reduce the buyer's uncertainty levels can be to resort to a prestigious partner, an expert, establish a high price that conveys quality and guarantee, include guarantees of refund of the amount paid, or offer trial periods, as we see in the example of Lynda.
Consumers tend to value the price of a good proportionally and not absolutely. This happens especially when we evaluate price differences between similar products. In one study, a group of consumers was asked how many would be willing to travel a greater distance to access a store and compare the same product for $10 instead of $15, thereby saving $5 on the purchase. 68% of the participants answered affirmatively. Another group of people was asked the same question but with different numbers. They were asked if they would be willing to travel a greater distance to access a store and compare the same product for $120 instead of $125, thereby also saving $5 on the purchase. In this case, 29% answered affirmatively. A higher proportion of savings (5 is 33% of 15) is more motivating than a lower proportion of savings (5 is 4% of 125). This principle has also been used to explain studies that show why we spontaneously tend to prefer a 100% saving on financing costs when buying a new car to a 5% saving on the final price of €20,000, even though in absolute terms the amount is greater in the second case. This is called the Weber-Fechner effect: the perception of price depends on percentages, not on the absolute difference. In the NH example, we see how they rely on this effect by resorting to the “free breakfast”. In this case, we perceive a 100% discount on the good, even though in absolute terms it may be less than a discount on booking the room. Idea . Reference prices A reference price is the price that a buyer considers reasonable and fair to pay for a good. With this in mind, we can use reference prices to, for example, increase sales of a lower-priced product. Thus, we can relate the price of a product to a more expensive one, which will be taken as a reference and will make the perception of the price of the first more positive. Another type of relationship that is often used is of the type “before €100, now €90”, as we see in the example of Vertbaudet.