BUSINESS

LOOK AT THESE PRICES!

By Jim Rayner

Last month I wrote about how the way in which prices are presented, and the comparisons they allow us to make, strongly influence buying behaviour. Let’s take that a stage further and look at these extracts from restaurant menus. Which layout works best?

Menu 1

Pan roasted Cornish hake ……......…..£22.00 Roasted duck breast ………...………..£23.00 Rib eye steak …………………………..£26.00 Wild mushroom risotto ……......……..£19.00

If, like me, you have a financial background you probably find this layout pleasing. It looks neat, clearly laid out and it’s easy to compare the prices – I can instantly see that the steak is the most expensive and the risotto the cheapest. Graphic designers might feel similarly.

Menu 2

Pan roasted Cornish hake, caper mash, braised cherry tomato, leeks & tarragon cream sauce 22 Roasted duck breast, pancetta, charred pak choi, duck fat roast potatoes & plum sauce 23 Dorset rib eye steak, hand cut chips, field mushroom, bubble & squeak 26 Wild mushroom and saffron risotto, parmesan and ripe Somerset pear 19

Now the emphasis is on the dishes themselves with much fuller descriptions and the prices themselves are less prominent without £ signs and without pence. Reading it we start to think about, and start anticipating, each menu item without being distracted by comparing prices.

As customers our eyes are drawn to the prices in the first example and we automatically start comparing them. But in the second menu we’re forced to read the much fuller descriptions and our first comparisons will be between the merits of each dish rather than their relative prices.

Why does that matter? Well, research shows that when the prices are presented in a vertical column making them easy to instantly compare, customers are much more price sensitive when choosing their dishes. Basically customers tend to choose cheaper dishes if the menu is presented using the menu 1 layout. The influence is subtle but over a whole evening service it is likely to be measurable. Less spending means less profit for the restaurateur.

But there’s even more going on here. Research by Yang, Kimes and Sessarego showed that diners in high end restaurants spent less when prices included a currency symbol. And in a separate study, Coulter, Choi and Monroe demonstrated that subconsciously we perceive numbers presented like £1,527.00 to be much bigger than £1527. That may seem strange but it seems to be because we read numbers in our heads, and so the more syllables the bigger the price seems to be. So if a restaurant, or any other business, presents their products using the menu 2 layout, does that amount to unfair psychological manipulation? I don’t think so. They are simply making it easier for us to compare the dishes on their merits without immediate distraction from comparing prices. When I go out for a meal I’m looking for an enjoyable experience. Of course price is important (price is always important) but value for money is more important and that starts with choosing a dish I know I’ll enjoy.

And of course now you’ve read this piece you will be able to allow for the psychology the next time you eat out!

If you really want to enjoy your meal here’s something else you might want to try. The normal pattern in a restaurant is that a member of the serving staff comes to your table and takes the orders from each person in turn. Research conducted by the behavioural economics team at Duke University in the US demonstrated that while the first person to order was usually very satisfied with their choice, the others were often less happy and sometimes regretted their choices. What seems to happen is that without realising it, we frame our choices not just to order something we think we will enjoy but we also want to look good in the eyes of our friends, and anxious to show our individuality, we choose something different. Researchers in Hong Kong observed the opposite phenomenon with diners more likely to follow the lead of the first person to order. Whether we are by nature conformists or rebels, the choices of the first to order seem to affect what everybody else orders.

The lesson here is that if you want to increase the chances of everyone in your party ordering dishes they will enjoy, a good plan is for you all the secretly write down your own choices before the waiting staff come to take the order. And of course don’t change your selection as the others reveal their orders.

If you own or run a business, whether or not it’s a restaurant, and you’d like to know more about the weird world of price psychology, you can download a free copy of my ebook Profitable Pricing – A Guide for Ambitious Business Owners from my website www.james-rayner.co.uk.

STAY ON TOP OF THE NUMBERS

PROTECT YOUR BUSINESS

SAVE LIVELIHOODS

SOME JAPANESE KASHIKOI* (KASH-COY)

By Patricia Marks

As I get older and I progress in my business journey, I would like to think I get wiser and more worldly! I believe I think much more deeply about the ‘why’s’ and ‘wherefores’ of business and how the magic happens.

Have you ever wondered why some businesses and business leads are more successful than others? I frequently do when I see an ordinary product/service taken to amazing heights and success, and particularly when those products and services are offered by many others who ‘on paper’ should be as successful or event better. • What you love • What you’re good at • What you can be paid for • What the world needs

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So, what can explain the difference? There is usually more than one thing but, in my view, there is definitely a dose of ikigai! Along with luck, constant planning, scheming and being well connected. Ikigai is a well-known and well-used Japanese saying. I have been lucky enough to have visited Japan on several occasions and loved my time there, emersed in a culture that is so very different from my own. The Japanese people are both an inspiring and confusing nation in equal measure. That said they have some wonderful rituals and sayings – ikigai being one of them and one I feel immeasurably drawn to.

What does ikigai mean?

Ikigai is a Japanese concept that means your ‘reason for being.’ ‘Iki’ in Japanese means life and ‘gai’ describes value or worth. Your ikigai is your life purpose or your bliss. It’s what brings you joy and inspires you to get out of bed every day. It’s important to mention that while traditional Japanese philosophy focuses on finding your bliss, western interpretation has used ikigai as a method of finding your dream career. The below ikigai diagram helps to visualize this concept by showing these four main overlapping qualities: So, does your business get you out of bed with a spring in your step? Are you the best and biggest advocate for all that you do and all that your business is? Are you working at something you are passionate about and is what the world needs? As we move towards 2022 perhaps take some time to think about your business model, its reason for being and whether it suits you and what you represent. The turn into a new year is an ideal time for reflection and realignment. Here’s to a prosperous and healthy 2022.

*Wisdom

The westernised version of ikigai says you’ve found your dream career when your career includes these four qualities:

ikigai diagram

SETTING FINANCIAL GOALS

By Mark Salter, Fort Financial Planning

As we begin the new year, many of us start thinking about the year ahead and setting goals for the future.

Regardless of what age you are, you are likely to have some short- and long-term personal financial goals. Setting tangible and realistic goals, following them, and tracking your progress is the key to being successful and achieving those goals.

Determining your short-, medium- and long-term personal financial goals is the first step. Some common goals are a dream holiday, a new home, saving for children’s education or building up retirement savings for your future. Once you have established your goals, the next step is to determine a good estimate for how much money you’ll need for each of them. Figuring out an accurate amount involves discussion about the goals — for example, if you are saving for university for your children, what percentage do you want to pay? Do you want to pay for private school education? Retirement savings needs depend greatly on the lifestyle you want in retirement as well as when you plan to retire. How long do you want to continue working for? Prioritise each of your personal goals in order of importance, and then determine how long you have to save for each of them. Retirement could be many years away, but your short-term goals could be in a year or two. Next, estimate the returns you’ll expect to gain on the savings you have made. While capital gains are never guaranteed, you can use an estimated average to help build your plan.

Finally, figure out how much you’ll need to save per month to achieve your financial goals. There are some useful tools online that can help you do this. Don’t be discouraged if the amount is overwhelming. The important thing is to have a set of tangible financial goals to work towards. You should then review your progress on a regular basis. If you aren’t meeting your goals, revisit your budget to see if there are any areas where you can cut expenses in order to free up money for savings. Could you reduce your household expenses such as weekly food shop, gas, electricity and insurance or could you reduce some items of discretionary expenditure? Alternatively there may be ways of increasing or generating additional income.

Financial planning is about enabling you to look back and say ‘I’m glad I did …’ rather than ‘I wish I had …’ Understanding your short-, medium- and long-term goals is essential to that process. You can create your own plan or you may require the help of a certified financial planner. If you are interested in finding out more, please contact Fort Financial Planning on 01935 813322.

EMAIL ADDRESSES …FREE ONE OR PAID ONE?

By James Flynn, Milborne Port Computers

Your email is just as important as any of your other IT services, so you will want to make sure you’re getting the best value for money, as well as the best possible service. There are lots of free email options out on the market (Gmail, Hotmail, etc.), and those offered free by your Internet Service Provider (BT, TalkTalk, Sky, etc.), but does it make sense to use them if you’re running a business or want to change your Internet Service Provider?

Paying for an email service means that you can easily send and receive emails through your own domain name, so you can have a professional email address, such as yourname@yourdomain. com. It makes your company look professional and it will make your service seem more credible. If you’ve already got a website, then you should be able to get an email address to match. Don’t join those I’ve seen who advertise a website and then a free email address; it looks so tacky. If you pay to host your email through private server hosting or through a service like Google Apps or Office 365, then you will also get a more reliable service compared to free email hosting. You will also have dedicated customer service and support; plus, the server you choose to host with most likely has higher security in place. Additionally, services like Office 365 offer extras such as cloud storage and email access on the go, which can be particularly useful if you need to access your email remotely. The big pro with a free service is that the service is free, and if you’re a small business who doesn’t rely heavily on emails to get in touch with clients or customers, then you can most likely get by for a while by using a free email client. You don’t necessarily have to live with a @gmail.com or @hotmail.com domain either. Gmail easily lets you use their system to send emails from your own domain, however, you need to have your domain set up to handle this. You can usually use the free email services that your DNS offers (usually limited to one free email address) to set up the initial server and then filter it through Gmail, Yahoo or whatever free service you want to use. However, these free services aren’t as secure, and you’ll have to live with adverts in and around your emails. What’s more, if you’re on a free service, then your email may not be routed with priority. A word of warning if you have an email address through your Internet Service Provider (such as BT, TalkTalk or Sky), if you change your provider for a better deal, which we would encourage you to do, then you run the risk of losing the email address that they had given you. Check the small print when you accept their ‘free’ email service!

If you’re a small business, the attraction of a free email service might be the fact that you don’t have to deal with the cost of running an email server. However, it can cost very little to host email. Some private servers can cost just a few pounds a month, and full packages such as Google Apps or Office 365 cost between £5 and £10 per month, so cost should never be a factor when it comes to ensuring the best email service for you! The choice as always is yours, but if you think you need advice, you know where to come.