5 Psychological Pricing Strategies
Every business owner sells a product or service and those products or services must be priced accordingly. Here are some psychological pricing strategies to think about and implement if necessary.
Psychological pricing in marketing is the idea that certain prices have more psychological impact on your customers than others.
Below are 5 ones you can implement today:
1. Visually Highlight Price Differences
This tactic involves showing two prices, one that has the original price (sometimes crossed out) and the other that has the new and cheaper price. This is a tactic proven to work because people feel like they are getting a bargain.
To take it further, make sure you make the font, font-style, and even color of the new, cheaper price, different than the original price. Also make sure to leave a bit of breathing room as far as spacing goes, this has been shown to be effective.
2. Use Comparative Pricing
Studies have shown that comparative pricing is the most effective strategy. Comparative pricing involves putting similar products side by side but making one significantly cheaper. This forces the customer to decide between two very similar products based on price alone.
3. Try The Buy One Get One Free Tactic
This tactic is when you offer a product at full price but give the customer another product of similar or even equal value for free. Customers look at this tactic as getting one more physical item than they would have otherwise and plays to the accumulation factor. A lot of people however don’t fall for this one because they assume that if the merchant is willing to give away something for free than the item they are paying for must be worth a minimal amount, or possibly be worthless.
Examples of ways around this can be:
• Buy one get the second 20% off
• Buy one get a credit for $100
• Buy one get 3 for free
4. Charm Pricing
Everyone has seen this one. Charm pricing involves using a price with $.99 at the end of it. Studies have shown that dropping the last digit from a ‘0’ to a ‘9’ made a pretty significant perceived difference in the numerical value of the item. So $3.00 was seen as significantly more expensive than $2.99, which is only a cent difference. To simplify this, the strategy says that converting zero ending numbers to nines is an effective psychological pricing strategy.
5. Prestige Pricing
This is the opposite of charm or odd pricing; using whole numbers in your pricing. Studies have shown that people can tend to purchase items that have even numbers, for instance a bottle of wine for $40 is more readily purchased than a bottle that is $38.98. The reason has to do with cognition and the ability to easily process numbers. Even or round numbers have been shown to create comfort in customers.
The point of this isn’t to trick your customers even though this is kind of what it sounds like we are trying to do. It is creative and minor number manipulation. You don’t want to rip off your customers or mislead them, but maybe incentivize them with little pricing strategies here and there.