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June 28, 2022

The psychology of bidding vs fixed price

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When it comes to making purchasing decisions, the power of your brain is fascinating. In the bidding world, it’s important to understand the psychology, the emotions, and the thrill of an online bid.  

As someone responsible for the commercials of a hotel, never underestimate the power of auction fever — it’s a real psychological component that affects the way people bid.

Social facilitation, time pressure, and the idea of being first all play a role.

Of these three factors, social facilitation is the most fascinating psychological component. By definition, social facilitation is when someone shows more effort due to the presence of others, whether it’s real, imagined, or implied.

In UpsellGurus case, there isn’t a physical presence since customers bid online. Instead, seeing the probability bar brings out the competitive energy and improves performance compared to if it were a fixed price offer.

There’s also the pseudo-endowment effect. The idea here is people tend to overvalue items in a bidding environment, making them more willing to bid higher. These pseudo-endowment feelings increase desire and motivation to bid on that incredible lake view, ocean view, City view or scantily painted brick wall view. That's why UpsellGuru customers have such a high conversion rate on upsells and why in my experience, bidding always performed better than fixed price upselling.

There is also a point in the pseudo-endowment effect when bidding becomes a game. Gamification appeals to our competitive side of beating someone else but also provides personal enjoyment.

A study from Princeton University found that bidders were less rational when competing for items against others. They concluded people place more value when winning a bid against others, which, again, can make customers more inclined to secure that upgrade.

There it is folks,

Psychology backs up that bidding is more effective than fixed price upselling so what are you waiting for?

Reach out to a Guru near you to start tapping into the psychological and commercial benefits of UpsellGuru

I'm Rob Paterson, UpsellGuru Brand Ambassador, Thanks for listening

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