Want to help prevent returns? Raise your prices!

Here’s a really interesting story that comes from the Stanford Entrepreneurship Center where Christine Benninger, President of the Humane Society of Silicon Valley talks how the organization was able to use pricing strategy to significantly decrease the return rates for cats and dogs.

Faced with unacceptable returns on cats and dogs that had been previously adopted, Benninger determined that the major cause of this was a perception of “low value” by the adopting public. This perception was fueled mainly by the low prices that the Humane Society was charging for adoption. Low prices equated to low value. And this perception of “low value” was causing owners, far too often, to return the pets back to the Humane Society after an earlier adoption. Benninger felt that the best way to solve this problem was to change these perceptions of value among their customers. And the best way to change perceptions of value was to raise adoption prices for both cats and dogs...and raise them she did - in some cases, prices when up almost 300%. So what happened when customers were faced with higher prices? Did return rates go down as expected? Did the higher prices negatively affect adoption rates? Take a look at the clip below to find out.

Here’s the takeaway. Most of us still follow the rule “You get what you pay for” and this can be translated into “expensive = good”. For the Humane Society of Silicon Valley to combat unacceptable returns, they relied on the old standby feature of increasing cost to increase the perceived value of their product. It worked for them and it will work for you.