Podcast – Which is better- packages or a-la-carte pricing
For this episode I want to address a question that comes up so often on social platforms as well as in my sales training, speaking and consulting: Which is better- packages or a-la-carte pricing? While no one answer is correct for every business, I want to give you some things to consider when deciding for your business.
Below is a full transcript. If you have any questions about anything in this, or any of my podcasts, or have a suggestion for a topic or guest, please reach out directly to me at Alan@AlanBerg.com or visit my website www.AlanBerg.com
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Hi, it’s Alan Berg. Welcome to the Wedding Business Solutions podcast. Today I want to talk about a subject that I get asked about a lot and it’s is pricing better as a-la-carte or as packages? It’s a really good question. And there’s no one easy answer for everyone except that psychologically, actually a survey from The Knot showed that couples preferred to start with packages, even if you’re going to customize around them, than a-la-carte, knowing that a-la-carte provides more information. But a-la-carte makes it actually harder to decide. There is a great book called The Paradox of Choice by Barry Schwartz. And he talks about decision paralysis, where it’s hard for somebody to make a decision if you provide them with too many choices. So your goal is not to have less choices. Your goal is to make it easier for them to decide from the choices that you have.
So, I’ll give you an example, I was looking at a brochure the other day for one of my clients. They were working on the new brochure for a venue that they’re going to be exclusive as a caterer. And in the brochure was breakfast menus, brunch menus, break time menus dinner menus, buffet, plated, stationed, dessert menus and bar menus. Nobody needs all of that. Nobody. And this was going to be all in one document. And I said, that’s TMI. It’s just TMI. And then I was looking at their wedding brochure and they had nine different packages that they were going to put out. And I said, well, what, first of all, why nine? And second of all in these packages, what’s really the difference. And it turned out that it really came down to whether or not you want it to have a plated meal or whether you want it to have a buffet or a stationed meal.
So I said, we ended up reworking this so that it cut it down to really just two choices. Did you want to have a plated meal or did you want to have a buffet or stationed meal? And then within those two choices were the choices of one choice of entrée, two choices of entree, three choices of entree, station choices, and so forth. What we want to do is not say to the customer that you have less things you can have. We want to say to them, first decide that you want to choose us. And then let’s make it easy for you to choose the actual meal.
Caterers and venues, this about this: If you’re going to go out to dinner with friends, would you first choose the restaurant or the dish that you’re going to eat? Now, sometimes you do choose the dish because you’re just, oh I love that restaurant because they have a miso soup, I want to get their miso soup, right? But when you go to the restaurant, if they say today we have some specials, even though you came in for the miso soup, you might say let me hear what the specials are, and maybe you’ll change your mind. But first you’re going to choose that restaurant. I want them to first choose you and then choose those details. A-la-carte pricing, while it does provide them more options also makes them make more decisions. In that book, The Paradox of Choice, they talk about decision paralysis, where they use an example. They went into a grocery store and set up six different jellies and jams for people to taste. (This was pre-COVID) And then they measured how many of those six flavors got sold. They did the same thing, same story, different time, with 20 different flavors. Then they measured how many got sold, and they sold more jellies and jams when there were only six flavors than when there were 20. Because with only six, you can decide, “I’m going to take these two or these three, or whatever.” With 20, you just can’t decide.
That’s decision-paralysis. You cause that with your customers. As a matter of fact, if you hear from your customers a lot: “You’ve given us so much to think about we need to go home and process this,” that’s probably your fault. You know, occasionally they do want to do that, but a lot of time you’re just providing TMI too much information. So think about again, if you went to a restaurant instead of a menu, they gave you a list of the ingredients that were in the kitchen. It’s going to be a very long, very extensive list. And technically you have more choices now, but it made it harder to decide, didn’t it? That chicken dish or fish dish or steak dish or vegetarian dish, that is already a group of ingredients prepared a certain way. It’s basically a package.
And then even further, sometimes there’s a price-fixed menu, which is a package: choose an appetizer, entree and dessert. Think about that way of selling. If you had the equivalent of appetizer, entree, and dessert, whatever your business is, can you put some things together? And then it’s the same price to get the different variables within that. But there are also upgrades, aren’t there? Think about that price-fixed menu, if you want the steak, it might be a $3 upcharge. And if you want the crab cake, it might be a $2 upcharge. You can still have upgrades from packages.
One of my clients has a venue when she only has one package. A very, very inclusive package. And then there are two pages of possible upgrades to the one package. Whereas other people might have three, four or five packages trying to put all of those different upgrades into different things. She finds it much easier to sell. As a matter of fact, the price is on her website, including tax and service. So somebody can easily figure out what they’re getting and how much it is. So, with packages versus a-la-carte, packages are better to start with, even if you’re going to allow people to customize within that. Now I know some of you are thinking to yourself, Alan, everything I do is custom. You know what, even if you’re doing packages, everything you do is custom because you’re still doing a custom menu or you’re still doing custom photography, or music, or flowers or whatever you do. Everything is going to be custom.
I’ve done this exercise with a bunch of my clients who think that everything they do is custom and that they can’t do packages. And we’ve been able to come up with packages by doing something like this. We go back and look at all of the type of events you’ve done: weddings, corporate, mitzvahs, quinceañeras, or whatever, and put them on spreadsheets. We enter the info something like this: the first column is the name of the customer; then the date; I like to put the day of the week so you can see the difference between a Friday, Saturday, Sunday, weekday, the number of guests, if that affects your price, and certainly the price. And then the other columns are how you sell. Are you selling a-la-carte or are you selling in packages? And what I’m looking for, is for the people that say “everything I do is custom” is patterns. I want to see the patterns that if people buy this, did they typically buy this and that, kind of like on Amazon, you know: “people who bought this also bought this and this.”
And if you typically sell these two or three things together, couldn’t you sell them as a package where when they buy them, they’re always buying them together? And you’re saying, listen, if you want this, you also want that, so I’m not even going to list them separately. And what I found is that even with florists and caterers, they’d be able to create packages. Everything is different, but you can group them in such a way that it’s easier to buy. And then you can customize after that. Some of my clients, like a venue, will have an inclusive package that might include a cake, but they don’t bake the cake. They send you to the cake baker and the cake baker says, you could have any one of these three or four cakes which are included with your package. If you’d like to upgrade, you can just pay the difference.
See, so it was in a package, but they’re still customizing and they can still upgrade. I was working with a photographer the other day and we got rid of his lowest package. We actually cut him down from, I think it was five packages, down to three. And three has a psychological effect. The Journal of Consumer Psychology calls it: The Center Stage Effect, where the thing in the middle is perceived to be the best value. And in his case, we lifted that center column just a little bit and called it the “best value” or their “most popular”. And then the truth is we actually took two packages, put them together into the middle package. And then you could add something on. So it’s like version 2.1 and 2.2 there. And that let us go from the five options down to three, or what appears to be three.
We actually got rid of his lowest package altogether. And that middle one now has an option. So it’s really two packages, but it looks like it’s one package in the middle, although it does have that upgrade that does have that option. So make it easier for people to buy by grouping things together that they should have together anyway, makes your job easier, selling it upfront. And if you want to sell them up to more stuff, put the package together, show what the value would be if they bought those things separately, have it so that there was a discount applied to that to come up with the number in the package. And now what happens if somebody says, well, gee, I don’t want this one thing? You can say, sure, not a problem. It doesn’t affect the price because you’re already getting a discount that was more than that.
Or you can let them swap something else out instead, but you can then get the higher sale. I think with packages, you can make it easier for you to sell, which makes it easier for them to buy. Or vice versa, if it’s easier for them to buy, it’s easier for you to sell and you can encourage higher sales by grouping the things together so that they see it. And it becomes a legitimate choice to choose all of those things as opposed to, ooh, I feel like I’m being extravagant by adding on and adding on and adding on. So, packages vs a-la-carte. If you want to make it easier to sell and easier to buy, packages is going to do that. If you step back and look from a purely data level, you’ll be able to take your a-la-carte way of selling and put it into a way that in almost every case, you can sell it as a package and then let them do the customization afterwards. And if they say, Hey, can I have X and X cost more? You say, sure, absolutely. That would be this much more, would you like me to add that to your package? So, I hope that helps you out and I hope you tune in for another episode.
Thanks for tuning into the Wedding Business Solutions podcast. If you have any questions about this or any of my episodes, or would like to make a suggestion of a topic for an episode, please reach out to me directly Alan@AlanBerg.com or visit www.AlanBerg.com Please subscribe so you don’t miss an episode, and post your review (it really does help, thanks!) I look forward to seeing you on the next episode.