Bill’s Pop Quiz Answers

Before you get the answers to the pop quiz I threw at you earlier this week, let me explain the purpose of the quiz. It ultimately comes down to the term anchoring.

carpet-cleaning-pricing-quizHere is the definition of anchoring per Wikipedia:

Anchoring or focalism is a cognitive bias that describes the common human tendency to rely too heavily, or “anchor,” on one trait or piece of information when making decisions.

This definition may sound like a piece right out of Psychology 101 but it actually affects our carpet cleaning pricing.

The “anchor” in a carpet cleaning price may be that silly ValPak coupon that comes in the mail stating “any size room cleaned for 6.95!” In the business, we know this is a low “sucker” price that is designed to get the tech in the customer’s home and then the high pressure selling begins!

Anchoring can work from the other direction- high to low. If you use package pricing, the high price package can be the anchor which is why the middle package sells the most. This also works in selling Scotchgard. If you tell the customer it will cost $125.00 to treat the entire carpet and they balk at the price, you can tell them the open areas will be only $89.00 and they jump at the price. If you had said initially that it costs $89.00 to protect the open areas they may not take it.

One other way to look at anchoring is to compare salaries. At your old job you made $35,000.00. In your new job you make $50,000.00 and you are thrilled. Then you find out that the other new tech makes $55,000.00. You now have a new anchor and your salary seems too small.

So let’s get down to the actual quiz and what it means. Many people object to the idea of  anchoring believing they are too smart to fall for the idea. The quiz was designed as a Cognitive Reflective Test. It does not measure intelligence in any meaningful sense. It is better described as a test of willingness to think through and check your answer.

Those who scored 0 or 1 of the questions correctly were considered to be “impulsive” and those that got 2 or 3 right were considered “reflective.” Both of the groups were asked questions about anchoring. Surprisingly the anchoring effect was slightly stronger than in the reflective group.

What this proves is that we are all affected by anchoring regardless of how smart we believe we are. This is proved in numerous scientific studies and is used everyday in every field. The key conclusion is to use these proven techniques in setting your prices.

Ready for the answers to the quiz? May I have the envelope please:

1. A gallon of preconditioner and rinse cost $110.00. The preconditioner costs $100.00 more than the rinse. How much does the rinse cost?  $5.00

2. It takes 5 Cimex machines 5 minutes to clean 5 empty hotel rooms. How long will it take 100 Cimex machines to clean 100 rooms?  5 minutes

3. In a large hotel ballroom there is a section of mold on the carpet. Every day the mold doubles in size. If it takes 48 days to cover the entire room, how long would it take to cover half of the room?  47 days

Confession time: I had a terrible time figuring out A. even after I saw the answer. Guess that means I will be calling the cleaner with the 6.95 a room offer!

3 thoughts on “Bill’s Pop Quiz Answers”

  1. A gallon of preconditioner and rinse cost $110.00. The preconditioner costs $100.00 more than the rinse. How much does the rinse cost? $5.00

    I had a terrible time with this one even after I read the answer. This is why I don’t work in accounting.

    The obvious answer is 10.00 but that is wrong. If they cost 110.00 together and you answer 10.00 then when you had added then together you would get 120.00 so that can’t be right.

    To get 110.00 and the preconditioner is 100.00 more then the rinse must cost 5.00 making the preconditioner 105.00. Together they equal 100.00.

    The idea is that in pricing we are all fooled because we make quick gut reaction decisions. In many cases these are the wrong decisions becuase we didn’t think through them.

  2. It’s a simple math problem

    P + R = 110
    P = R + 100

    R + R + 100 = 110
    P = R + 100

    R = (110 – 100)/ 2 = 10/2 = 5
    p = 5 + 100 = 105

    R (Rinse) = $5
    P (Preconditioner) = $105

    Just in case someone is still confused :>) :)) :)))


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