In fifth grade I convinced my teacher to let me skip a few hours of class each week to work on my own “book” project with an enrichment teacher. There seemed to be an unspoken understanding that I would never learn my multiplication tables—when it came to math, this child was left behind. So, why not sharpen the creativity I did possess.
So, being the good girl that I was, I toiled away in that little room every Friday, studiously working on my book without so much as a peep.
And then one day my enrichment teacher left the room to make a photocopy and I turned to the dark side.
Starving, and in desperate need of a snack, I suddenly found myself staring at three jars of candy. I wasn’t a criminal—but I was also a 110-pound 10-year-old. I had some food issues.
Assessing the three jars, I knew I couldn’t steal a candy bar. That was too big of a crime—and far too obvious. But I didn’t want a measly M&M either. If I was going to doing something bad, it had better be worth it.
So logically I settled on the middle option—a lollipop.
Heart racing, I tiptoed over to the medium-sized jar, looking over my shoulder one last time before plunging my pudgy hand into the goodies. But just as I located the lone cream soda lollipop, I heard my teacher’s voice behind me.
“Lauren—what are you doing?”
Stunned, I dropped the glass lid to the jar, motionless as it came crashing down on the desk.
“Ummmm,” I stammered, clutching the lollipop.
“Lauren, you can have the lollipop,” Mrs. Velori said. “You deserve it.”
“I don’t want it.”
“Take it,” she insisted.
Mortified, I slid the lollipop in my pocket and returned to my desk, refusing to look Mrs. Velori in the eye for the remainder of the day. What had I just done to my burgeoning career?!
But it really wasn’t my fault. I was a victim of typical consumer psychology.
“Given three choices, most people go with the Goldilocks approach—choosing the middle, or ‘just right’ option, and avoiding extremes,” said Donald Davidoff, former Executive Vice President of Pricing and Marketing at Salem, Ore.-based Holiday Retirement and a panelist during the session “The Psychology of Price” at the 2012 ARM Conference in October.
“I consider myself to be an active consumer and I find myself falling right into that trap of picking the thing in the middle,” adds panelist Julie Smith, President of Greenbelt, Md.-based Bozzuto Management Company. “I think the cheapest product won’t be very good and the most expensive option seems to be priced too high. I do it all the time—at car washes and everything. It just feels safer to choose the middle.”
You see, I had to choose—OK, steal—that lollipop!
Smith and Davidoff say this consumer tendency should be applied to the apartment industry. Rather than giving a potential resident 15 unit choices of varying price points, both panelists suggest offering just three—with the middle choice priced at the desired rental rate.
However, Davidoff says if a prospective resident is particularly price sensitive, only one or two units should be shown, both at the lower price end. Given three choices, the prospective resident may feel he is being cheap in wanting the least expensive one.
Or he may just try to steal the apartment like yours truly.
For more, check out “Resident Psychology: Centering on the Right Price,” on pg. 44 of the January issue of units.