What Does Your Price Say About You?

Payless—the discount shoe retailer—recently pulled off a brilliant stunt: they sold fake designer shoes at a fake designer store. And the ruse carries lessons for anyone in sales and marketing.

Payless took over a former Armani store in a mall in Santa Monica, California, and named it “Palessi.” (I love that.) Then they stocked the location with the same shoes they sell at all their other stores. But the merchandise had two modifications: their regular labels were replaced with a fake designer label (Bruno Palessi), and their price tags were bumped up from their usual $20 to $40 range to $200 to $600.

And people bought them.

Within hours, “Palessi” sold more than $3,000 worth of (normally) discount footwear. And in taped interviews, happy customers gushed about the style, quality, and craftsmanship of the shoes.

There are several reasons the hoax worked so well—an Italian-sounding designer name, the luxuriously-appointed store interior—but arguably the most important was this: price—in and of itself—communicates a lot about your brand.

Most consumers—myself included—typically avoid Payless because we believe that their value proposition—CHEAP SHOES!—means that their merchandise is constructed poorly, with low-quality materials, and is not particularly stylish.

In fact, this perception led to such poor sales that Payless had to close 673 stores and seek bankruptcy protection in 2017. Unless people are really squeezed financially, they prefer to spend more for better quality, service, and results.

And because we know from experience that better means more expensive, we also believe the reverse: that more expensive means better. “Palessi” shoppers made the (very common) leap that if these shoes are really expensive, they must be really good.

We all make this assumption every day. It’s why in experiments where the same wine is poured into two different bottles—one with a cheap label and one with an expensive label—tasters describe the samples completely differently, invariably preferring the wine with the pricier label.

Price communicates information about a product or service’s quality, scarcity, desirability, power, effectiveness, reliability, life-span, exclusiveness, safety, and more. That information might not be accurate—diamonds, while expensive, are actually pretty common—but we assume it is. It’s a mental shortcut we take, and once we’ve taken it, it’s hard to go back.

Payless—which refunded everyone’s money and turned the footage into YouTube videos and TV commercials—may or may not be able to leverage this stunt into a long-term change in consumer perceptions and a corresponding increase in sales, but it’s a great effort. And a needed one. Because in order for Payless to survive, they have to convince shoppers that low price can mean high quality and high style. That’s a tough sell though. It’s so much easier for us to believe the opposite.

So what assumptions are prospects making about your product, service, and company based on your pricing? What does your price say about you?