The Psychology of the Sale

I've been thinking recently about the psychology of "sales" -- the way we shoppers respond to the idea of getting a bargain -- and what it means for software authors and companies who want to just price their products reasonably from the start, or offer them up as donationware.

Here's an article by Jonah Lehrer, whose "Frontal Cortex" blog is one of the more consistently readable and insightful science blogs on the internet:

• http://scienceblogs....logy_of_the_sale.php

In it he talks about the competing signals sent when things are on sale -- the very strong initial incentive a sale creates in the minds of buyers, even when they don't need a product -- followed by a slower and more complex alteration of brand opinion.

Advertising is an old business, but i think one of the newer aspects that is of some concern and note in the internet age is that on the web it seems that attention is king, and the difference between a company going bankrupt and having record sales (or going broke and having lots of donations) can come down simply to whether other popular sites write about your products and present them as valuable.

And my fear is that this more central role of attention and press in the internet age results in a real disadvantage to software authors in terms of offering their software at low prices or asking for donations -- i worry that an open source game that asks for donations won't get anyone writing about how it's a good idea to support the product, wheras a game that started out priced at $50 but then dropped to $10 will create a huge amount of press and attention and thus a large number of customers.

So.. are we getting to the point where companies have to do these kabuki dances on the internet where they have one normal price that they set quite high, specifically so they can offer "sales" and "discounts" to get attention?  And does this spell doom for donationware authors don't have the ability to have "sales" ("for one week only -- donate half what you normally would!")?

In fairness, free software has its own special appeal on the internet, and gets a fair amount of attention over commercial products by nature of being free -- so that does offset this problem somewhat.  However.. we still have the pernicious problem where most people would crawl over glass to pay half price for an expensive piece of software than make a tiny donation to an equally good free alternative.