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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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Have you ever deliberately avoided looking at your bank balance after a big shopping spree? Or scrolled past a subscription renewal notice, pretending you didn't see it? If so, you've experienced the Ostrich Effect—a psychological phenomenon where people avoid potentially negative information by "burying their heads in the sand" like ostriches (though real ostriches don't actually do this).
In the business world, particularly for SaaS companies, this phenomenon manifests when customers actively avoid pricing information, creating significant challenges in the sales process. Let's explore why this happens and what you can do about it.
What Exactly Is the Ostrich Effect?
The Ostrich Effect describes our tendency to avoid information we perceive might cause discomfort or anxiety. First identified by economists Dan Galai and Orly Sade in 2006, this cognitive bias was observed in investors who checked their financial portfolios less frequently during market downturns.
In the context of purchasing decisions, this manifests as pricing avoidance—customers deliberately postponing or avoiding exposure to cost information, even when they're interested in the product or service.
Why Customers Engage in Pricing Avoidance
Fear of Budget Constraints
Many business decision-makers avoid pricing pages because they fear discovering that a solution they're excited about exceeds their budget. According to a 2022 Gartner survey, 77% of B2B buyers reported that their recent purchases were complex or difficult, with budget concerns being a primary factor.
Value Uncertainty
Customers may delay looking at pricing because they haven't yet determined if the value justifies the cost. Research from the Harvard Business Review found that 65% of customers feel they don't have enough information about value to make confident purchasing decisions.
Anticipation of Complex Pricing Models
SaaS pricing models can be notoriously complex with tiers, user-based pricing, feature limitations, and add-ons. A study by ProfitWell revealed that 54% of SaaS customers find pricing pages confusing, driving information avoidance.
Avoidance of Mental Commitment
Viewing a price creates a psychological milestone in the decision process. According to behavioral economists, seeing a price forces customers to mentally move from the exploration phase to the decision phase, which many aren't ready to do.
Real-World Examples of Information Avoidance in Action
Case Study: Enterprise Software Procurement
A CIO at a mid-sized manufacturing company described their purchasing process: "I'll often have my team research solutions first without looking at pricing. I deliberately avoid cost discussions until we're clear on functionality because I don't want price anchoring to influence our evaluation of what we actually need."
Industry Data
According to a 2023 study by Forrester, B2B buyers visit a vendor's pricing page an average of 3.1 times before contacting sales, but 43% report deliberately delaying this step until late in their research process.
How SaaS Companies Can Address Pricing Avoidance
Emphasize Value Before Price
Rather than leading with pricing, develop clear value propositions and ROI calculators. Slack effectively does this by highlighting productivity gains before introducing pricing tiers.
Create Transparent, Simple Pricing Models
Complex pricing increases information avoidance. Companies like Basecamp have succeeded with straightforward, all-inclusive pricing structures that customers can understand at a glance.
Provide Context for Pricing
Contextualizing your pricing relative to the value delivered helps customers overcome avoidance. HubSpot does this effectively by framing their pricing in terms of the marketing budget their platform helps manage.
Progressive Disclosure of Pricing Information
Consider a staged approach to pricing information. Zoom offers basic pricing information upfront but reveals more detailed enterprise pricing after capturing some basic qualification information.
Address Budget Concerns Proactively
Acknowledge budget constraints directly and provide options. Many SaaS companies now offer "budget-friendly" tiers or implementation options that allow customers to start small and scale up.
The Psychology Behind Successful Pricing Strategies
Research in behavioral economics suggests that overcoming information avoidance requires reducing the anticipated psychological pain of receiving information. This explains why companies like Adobe have shifted from single large payments to subscription models with smaller, more palatable monthly fees.
According to a study in the Journal of Consumer Research, customers are more likely to engage with pricing information when they feel in control of the process. This supports the effectiveness of interactive pricing tools that let customers customize solutions to their specific needs.
Conclusion: Bringing Ostriches Out of the Sand
The Ostrich Effect and pricing avoidance behavior present real challenges for SaaS companies, but understanding this psychological phenomenon creates opportunities to design more effective sales processes.
By acknowledging that customers naturally avoid information that causes anxiety, companies can develop strategies that make pricing information more approachable, contextual, and value-focused. The goal isn't to hide pricing but to present it in ways that minimize the psychological barriers that trigger avoidance behavior.
For SaaS executives, the key takeaway is that addressing information avoidance requires more than just clearer pricing pages—it requires a holistic approach to how value is communicated throughout the customer journey. By helping customers overcome their natural tendency to avoid potentially uncomfortable information, you'll create more transparent relationships and ultimately close more deals.