Farid Asadi

Growth, Experiment Driven.

Applying The Loss Aversion Principle on Pricing Pages

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Recently, I’ve been digging into Loss Aversion, a cognitive bias that states that the pain of loss outweighs the joy of gain(It’s better not to lose $5 than to find $5.)

The examples around this effect are plentiful, but I’ve been thinking/hypothesizing about changing a default on the pricing pages.

Most of the time, we see monthly pricing with a toggle to switch to annual payment — which is always discounted. Now imagine the otherwise… Monthly prices (annually paid) as the default option on the page.

It may seem like just changing the toggle’s default, but let’s see it from a different perspective:

  • In the usual scenario, users see the monthly pricing and if they change it to annual, they save. Seems like a GAIN.
  • On the other hand and on the alternative version, users will see monthly pricing (annually paid) by default, and once they switch, they will lose some savings. Seems like a LOSS. — Additionally, the pricing may seem more appealing at the first glance.

I’ve not had a chance to test this, but I think it’d be an interesting one. It will be more interesting in the pre-experimentation phase since it may impact multiple metrics including CVR, revenue, and LTV.

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