Prospect Theory Can Increase Your Sales

Use Prospect Theory to Make Sales

Jonah Berger’s fifth principle in his book Contagious surrounds the notion of practical value and prospect theory.

It covers how the elements in prospect theory can have a strong influence on people’s purchasing preferences.

So far, we’ve covered:


Use the links to read any of the previous blogs.

Are you a member of our marketing and business Facebook group? Join here!

What is Prospect Theory?

Prospect theory is very basic at its core. The deeper you delve, the more complicated it becomes but we’ll keep it simple here.

The way we as humans make assumptions and decisions isn’t always rational.

We don’t evaluate things perhaps as we should. We evaluate things relative to comparisons, or rather, reference points. 

For example, in the north of England, Mark can secure a decent pint in a nice pub for as little as £3 in some places. The £3 pint is therefore Mark’s reference point.

So when Northern-Man Mark decides to venture down south for whatever reason, he’s often shocked and appalled at paying upward of £5-6 for the same pint – he’s only in a different, no nicer location.

But because his reference point is lower than the new price, it looks odd. For seasoned Londoners, the £6 pint may seem totally normal, because this is their reference point.


The concept of sales in shops is a great example of prospect theory.

A study was conducted into the power of the word ‘sale’ and found that merely using the word ‘sale’ by an item increased sales by more than 50%.

By the way, the price of the product hadn’t changed. The word ‘sale’ was just added alongside the price.

One small, four-letter word changed the perceptions of hundreds of people.

Feel the power.

So keep your wits about you when you see the S-word. All might not be as it seems.

Diminishing Sensitivity

Diminishing sensitivity is another concept within this realm.

‘…the same change has a smaller impact the farther it is from the reference point.’

Basically, the more expensive something is, the less you notice the smaller changes in price.

For example, the difference between £10,000 and £10,050 feels a lot smaller than the difference between £50 and £100.

Obviously, it isn’t though. But as the value of the amounts reviewed rises, our sensitivity to wealth reduces.


If a product is one of only few left, people will rush to get in before it’s gone.

Once they’ve bought it, they’re in the group of people who’ve got it. Anyone who came in after them will have missed out.

This is an effective way to make people feel like insiders.

RELATED: How To Use Emotion In Marketing To Have A Bigger Impact

The Rule of 100

The rule of 100 is a well-known notion in prospect theory.

Think about discounts.

Items with discounts are either seen as a percentage off the original price or money off.

10% off or £10 off.

If you’re selling, you want to make that discount seem as big as possible.

And as a buyer, the thought of getting a bargain is always enticing.

It all depends on the original price.

The rule is:

If an item is less than £100 then a percentage off will seem more than a number discount. And if the original price is more than £100 then a number discount will seem larger.

That’s why sometimes you see ‘% off’ and other times ‘£x off’.

YOU MIGHT LIKE: How To Use Brand Storytelling To Grow Your Business

The more surprising and the better an offer is on a product, the more likely people are to share it.

Limited availability also causes this and in turn makes people more inclined to buy.

This principle is all about showing prospective buyers the value of what you’re selling.

Implement some of these prospect-theory strategies and look for a spike in sales.

For more marketing information, send us a message on Facebook.

To learn more about our marketing and web services, fill out a contact form below.

How useful was this post?

Click on a star to rate it!

We are sorry that this post was not useful for you!

Let us improve this post!

Tell us how we can improve this post?

Contact Stone Create

to find out how we can benefit your business

Talk to us

Unit 1, Centurion Park, Wheelton Lane, Farington, Leyland, PR25 3UQ

Request a Quote