One that's too high for most, one that's too low for most, and one that's just right. The Goldilocks Effect ultimately informs a comparative pricing strategy involving three options. Here's what that strategy looks like in practice: That specific strategy is a brand of something known as comparative pricing - when businesses offer multiple versions of a product simultaneously of varying quality, attached to corresponding price points. That technique can be employed by companies both internally and externally.īusinesses can only leverage the Goldilocks Effect if they differentiate their own products from one another. Product differentiation is exactly what it sounds like - the practice of distinguishing certain products from other ones. It's a psychological pricing strategy that rests on the concepts of product differentiation, comparative pricing, and bracketing. Goldilocks Pricing is one of the effect's more prominent applications.

It applies to elements of psychology, hard sciences, economics, marketing, and engineering - and each one has its own twist on how the principle is applied. The Goldilocks Effect has a place in several fields and disciplines. In the context of pricing, businesses capitalize on the effect by offering three versions of a product at different price points: one high-end, one middle, and one low-end. The Goldilocks Effect - or the Goldilocks Principle - is the premise that people are inclined to seek 'just the right amount' of something.

Goldilocks cake