Psychological pricing magazine development book

Q13853830

development book

ructure raphic St G y il m Fa r1 Semeste Year 2 s Dijkman ly r e b im K 853830 No. Q13 t n e d u t S

Introduction 3 Ideas 4 Final idea

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Research 7 Design inspiration

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Shapes 16 Experimentation with shapes

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Magazine format

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Grids 21 Typeface 24 Colours 26 Magazine content

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Design variations

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Final design

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References 53

I am Kimberly Dijkmans, I’m an Erasmusstudent from Belgium. I’m in my third and final year of the undergraduate study Graphic and Digital Media at AP University College in Antwerp. I’m on an exchange to Southampton Solent University for one semester.

This development book is part of my family project from the Graphic Structure unit. In this project, I was asked to investigate a ‘family’ of some kind and eventually create final spreads for a book or magazine about the proposed subject. The focus of the family project was to incorporate the use of grids in our designs.

I choose the subject psychological pricing.

Prices are often boring and it is something we see every day. This makes it extra challenging for me to create an interesting design. My final magazine reveals tricks and techniques that shops use to sell more and shows how psychology is used in pricing.

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GENERAL • christmas decoration • watches • spilling drinks • spending money • things that drivers do • nose picking • swearing • not indicating while driving • taking two spaces in a parking lot • tailgating • running out of toilet paper • food deliveries • toast that falls on the buttered side • colours of M&Ms • bubblegum • losing hair ties and clips • the illustration on toilet paper • buying things in the wrong size • DECEPTION • cheating • use of a green screen • CGI • steriods • drugs • make-up • discounts • psychological pricing • advertisements • hypnosis • optical illusion • push-up bras • heels • wigs • the set-up of a supermarket • photo deception • lies • watering down liquor • fake liquor • sucking in the belly

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“Deception, beguilement, deceit, bluff, mystification, ruse, or subterfuge is the act of propagating a belief that is not true, or is not the whole truth (as in half-truths or omission). Deception can involve dissimulation, propaganda, and sleight of hand, as well as distraction, camouflage, or concealment.�

- Wikipedia

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“Psychological pricing is a pricing/marketing strategy based on the theory that certain prices have a psychological impact.�

- Wikipedia

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WHEN SIMILARITY COSTS SALES % completing a purchase 2 items same price 46% 2 items different price 77%

KEEPING PRICES SIMPLE

$1,499.00

The top two prices seemed far higher than the third price. This effect occurs because of the way one would

$1,499

say the numbers out loud: “One thousand four hundred and ninety-nine,” versus “fourteen ninety-nine.” This

$1499

effect even occurs when the number is evaluated internally, or not spoken aloud. As silly as it may seem, the implication is similar to editing prose—avoid all unnecessary additions, and prefer the simplest style possible.

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DIFFERENT LEVELS OF PRICING

Test #1 Four out of five people chose the more popular premium option. But could adding a third item and $1.80

$2.50

20%

80%

price point increase revenue by targeting those looking for a cheaper option? The researchers tested this by adding a $1.60 beer to the menu.

Test #2 Oh no! The cheap beer was ignored and it upended the ratio of standard to premium purchases. This was clearly the wrong choice, since in this instance anchoring is actually playing a negative

$1.60

$1.80

$2.50

0%

80%

20%

role. If customers don’t want a cheaper beer, perhaps a more expensive beer might work?

Test #3 These examples clearly show how important it is to test out different brackets of pricing. This is especially true if you believe you may be undercharging. Some customers are always going to want the most expensive option, so adding a super-

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$1.80

$2.50

$3.40

5%

85%

10%

premium price will give them that option and will make your other prices look better by comparison.

REFRAME THE PRODUCT’S VALUE

$84/month

$1,000/year

It’s easier to evaluate how much you’re getting out of an $84/month subscription than a $1,000/year subscription, even though they average out to around the same cost.

SWEAT THE SMALL STUFF

a $5 fee

a small $5 fee

In another CMU study, trial rates for a DVD subscription increased by 20 percent when the messaging was changed from “a $5 fee” to “a small $5 fee,” revealing that the devil sometimes is in the copy details.

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DIGIT ENDING OF PRICES

Digit ending 0 5

Proportion in the 1997 ‘Marketing Bulletin’ study 7% 28%

9

60%

DIFFERENT TYPES OF PRICING STRATEGY Premium Pricing Premium pricing strategy establishes a price higher than the competitors.

It’s a strategy that can be effectively used when there is something unique about the product or when the product is first to market and the business has a distinct competitive advantage. Premium pricing can be a good strategy for companies entering the market with a new market and hoping to maximize revenue during the early stages of the product life cycle.

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Penetration Pricing A penetration pricing strategy is designed to capture market share by entering the market with a low price relative to the competition to attract buyers. The idea is that the business will be able to raise awareness and get people to try the product. Even though penetration pricing may initially create a loss for the company, the hope is that it will help to generate word-of-mouth and create awareness amid a crowded market category.

Economy Pricing Economy pricing is a familiar pricing strategy for organizations that include Wal-Mart, whose brand is based on this strategy. Aldi, a food store, is another example of economy pricing strategy. Companies take a very basic, low-cost approach to marketing--nothing fancy, just the bare minimum to keep prices low and attract a specific segment of the market that is very price sensitive.

Price Skimming Businesses that have a significant competitive advantage can enter the market with a price skimming strategy designed to gain maximum revenue advantage before other competitors begin offering similar products or product alternatives.

Psychological Pricing Psychological pricing strategy is commonly used by marketers in the prices they establish for their products. For instance, $99 is psychologically “less� in the minds of consumers than $100. It’s a minor distinction that can make a big difference.

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5 STRATEGIES OF ‘PSYCHOLOGICAL PRICING’ We are all in business to solve problems, add value and make a profit -- tasks which involve pricing your product or service. But how do you effectively price your product or service to increase sales and make more money with little or no effort?

It’s simple; use psychological pricing.

Psychological pricing is a pricing/marketing strategy based on the theory that certain prices have a bigger psychological impact on consumers than others. Below are five pricing strategies entrepreneurs can adopt: 1. Charm pricing: reduce the left digits by one 2. Prestige pricing strategy 3. BOGOF: buy one, get one free 4. Comparative pricing: placing expensive next to standard 5. Visually highlight the different prices

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To get some ideas for the shape and size of my editorial, or the design itself, I started to sketch all kind of shapes relative to my subject. Lables are an important aspect in psychological pricing. There are lables in all different shapes and sizes.

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I made little dummies out of different shapes and sizes.

This way I could experiment and combine different options.

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Before I started to design my editorial digital, I sketched different grids relative to my subject, psychological pricing.

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By doing research, I noticed that most of the typefaces in prices and discounts or sales advertisements are sans-serif fonts. This is because a sans-serif font is more easily readable. It is important that people can read and understand it quickly as a first impression is made within 90 seconds. I decided to compare different sans-serif fonts to each other and decide which one suits best with my subject to use in my magazine.

The font Avenir was the best fit. I choose to use a slightly bigger leading what makes the text even more easily readable.

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ARIAL NARROW BOLD

CAVIAR DREAMS BOLD

Arial Narrow Bold

Caviar Dreams Bold

Arial Narrow Regular

Caviar Dreams Regular

FIRA SANS MEDIUM

RALEWAY BOLD

Fira Sans Medium

Raleway Bold

Fira Sans Book

Raleway Regular

HELVETICA BOLD

AVENIR BLACK

Helvetica Bold

Helvetica Regular

MYANMAR MN BOLD Myanmar MN Bold

Avenir Black Avenir Book

PT SANS BOLD PT Sans Bold

Myanmar MN Regular

PT Sans Regular

TAHOMA BOLD

TREBUCHET MS BOLD

Tahoma Bold

Trebuchet MS Bold

Tahoma Regular

Trebuchet MS Regular

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By doing research, I have found that colours that are used in pricing are most of the time bright, contrasting colours such as red and yellow. In most cases the background will be red or yellow and the text on top red or black. This is because the prices or discounts have to be striking and eye-catching. I’ve decided to use the colours bright red and yellow, as well as black for text and white for most backgrounds or some text on top of a colour.

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5 STRATEGIES OF PSYCHOLOGICAL PRICING 1. Prestige pricing strategy Prestige pricing is the complete opposite of odd or charm pricing.

Prestige pricing involves making all numerical values into rounded figures, i.e., $99.99 is converted to $100.

You may be wondering why. According to Kuangjie Zhang and Monica Wadhwa in a 2015 study, rounded numbers (e.g., $100) are more fluently processed and encourage reliance on consumers’ feelings, compared to non-rounded numbers (e.g., $99.99), which are less fluently processed, and encourage reliance on cognition.

This means that rounded numbers “feel right� because the purchase is being driven by feelings and the price is processed quickly.

Zhang and Wadhwa realized that consumers were more inclined to buy a bottle of champagne when it was priced at $40.00, rather than $39.72 or $40.28.

2. BOGOF: buy one, get one free This is a pricing strategy in which customers pay the full price for one product or service to get another for free.

The psychological strategy at work here is, simply, greed. Once a customer comes across the offer, logic gets tossed to the wind and the main focus is making a purchase to get the free item.

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Now, because this technique has been widely adopted and most people no longer take the bait, you could stir things up a bit by offering one of the following: - Buy one and get 25 percent off your next purchase.

- Purchase one and get four bonuses valued at $60, for free.

- Buy one, get three for free.

To fully maximize this strategy, get creative with your discount offers.

3. Charm pricing strategy: reduce the left digits by one This strategy, often called “charm pricing,” involves using pricing that ends in “9” and “99.”

With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention. For example, your brain processes $3.00 and $2.99 as different values: To your brain $2.99 is $2.00, which is cheaper than $3.00.

How is this technique effective? It all boils down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called “the left-digit effect in price cognition.” They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains unchanged (e.g., $3.60 to $3.59).”

In an experiment conducted by the University of Chicago and MIT, women’s clothing was used to test the left-digit effect. First, prices were set for $34, $39 and $44. To the amazement of the researchers, the items 28

sold best at $39 even though that price was more expensive than other options.

So, the message here is, if you want to increase purchases of your products and services, convert zero ending numbers to nines. A perfect example of this strategy can be found on Apple’s website, where each product price ends with a 9.

A postscript: Keith Coulter, associate professor of marketing at the Graduate School of Management, Clark University, has suggested that this effect may be enhanced when the cents are printed in a smaller font.

4. Visually highlight the different prices When you offer a sale with a previous price side by side with a new one, you make more sales because customers feel they are getting a bargain and are not interested in researching the drop in price.

To make the new pricing strategy work effectively, use the psychological trick of changing the font, size and color of the new price.

This trick triggers a fluency effect and consumers interpret the visual difference to a larger numeral distinction, according to 2005 research by Keith Coulter and Robin Coulter.

According to that research, simply changing the font, size and color of the signage for the current sale price and placing it a little bit away from the previous pricing will increase the number of purchases, because customers see the new price as cheaper and a better deal than the previous price.

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5. Comparative pricing: placing expensive next to standard Comparative pricing may be tagged as the most effective psychological pricing strategy. This simply involves offering two similar products simultaneously but making one product’s price much more attractive than the other.

This is a psychological game of choice for the customer, who has to choose between two products that are similar but have different prices.

This strategy works well with fashion brands, which place side by side tuxedos with similar quality but different prices, to make customers pick the more expensive one, which is the desired purchase.

To the average human, if something is expensive, then it is “quality.”

A perfect illustration of this strategy would be the case study on “The Williams-Sonoma bread maker”.

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A postscript: Keith Coulter, associate professor of marketing at the Graduate School of Management, Clark University, has suggested that this effect may be enhanced when the cents are printed in a smaller font.

So, the message here is, if you want to increase purchases of your products and services, convert zero ending numbers to nines. A perfect example of this strategy can be found on Apple’s website, where each product price ends with a 9.

In an experiment conducted by the University of Chicago and MIT, women’s clothing was used to test the left-digit effect. First, prices were set for $34, $39 and $44.

To the amazement of the researchers, the items sold best at $39 even though that price was more expensive than other options.

How is this technique effective? It all boils

How is this technique effective? It all boils down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called “the left-digit effect in price cognition.” They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains unchanged (e.g., $3.60 to $3.59).”

DIGITS BY ONE

cesses $3.00 and $2.99 as different values: To your brain $2.99 is $2.00, which is cheaper than $3.00.

REDUCE THE LEFT

This strategy, often called “charm pricing,” involves using pricing that ends in “9” and “99.”

With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention. For example, your brain pro-

‘CHARM PRICING’

‘CHARM PRICING’ REDUCE THE LEFT DIGITS BY ONE

A postscript: Keith Coulter, associate professor of marketing at the Graduate School of Management, Clark University, has suggested that this effect may be enhanced when the cents are printed in a smaller font.

So, the message here is, if you want to increase purchases of your products and services, convert zero ending numbers to nines. A perfect example of this strategy can be found on Apple’s website, where each product price ends with a 9.

In an experiment conducted by the University of Chicago and MIT, women’s clothing was used to test the left-digit effect. First, prices were set for $34, $39 and $44.

To the amazement of the researchers, the items sold best at $39 even though that price was more expensive than other options.

How is this technique effective? It all boils down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called “the left-digit effect in price cognition.” They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains unchanged (e.g., $3.60 to $3.59).”

rent values: To your brain $2.99 is $2.00, which is cheaper than $3.00.

With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention. For example, your brain processes $3.00 and $2.99 as diffe-

This strategy, often called “charm pricing,” involves using pricing that ends in “9” and “99.”

‘CHARM PRICING’ REDUCE THE LEFT DIGITS BY ONE

This strategy, often called “charm pricing,” involves using pricing that ends in “9” and “99.” down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called “the left-digit effect in price cognition.” They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains unchanged (e.g., $3.60 to $3.59).”

With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention.

For example, your brain processes $3.00 and $2.99 as different values: To your brain $2.99 is $2.00, which is cheaper than $3.00.

In an experiment conducted by the University of Chicago and MIT, women’s clothing was used to test the left-digit effect. First, prices were set for $34, $39 and $44. To the amazement of the researchers, the items sold best at $39 even though that price was more expensive than other options.

So, the message here is, if you want to increase purchases of your products and services, convert zero ending numbers to nines. A perfect example of this strategy can be found on Apple’s website, where each product price ends with a 9.

A postscript: Keith Coulter, associate professor of marketing at the Graduate School of Management, Clark University, has suggested that this effect may be enhanced when the cents are printed in a smaller font.

31

‘CHARM PRICING’ REDUCE THE LEFT DIGITS BY ONE This strategy, often called “charm pricing,” involves using pricing that ends in “9” and “99.”

With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention. For example, your brain processes $3.00 and $2.99 as different values: To your brain $2.99 is $2.00, which is cheaper than $3.00.

How is this technique effective?

It all boils down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called “the left-digit effect in price cognition.” They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains un-

changed (e.g., $3.60 to $3.59).”

In an experiment conducted by the University of Chicago and MIT, women’s clothing was used to test the left-digit effect. First, prices were set for $34, $39 and $44. To the amazement of the researchers, the items sold best at $39 even though that price was more expensive than other options.

So, the message here is, if you want to increase purchases of your products and services, convert zero ending numbers to nines. A perfect example of this strategy can be found on Apple’s website, where each product price ends with a 9.

A postscript: Keith Coulter, associate professor of marketing at the Graduate School of Management, Clark University, has suggested that this effect may be enhanced when the cents are printed in a smaller font.

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‘BOGOF’ BUY ONE, GET ONE FREE. This is a pricing strategy in which customers pay the full price for one product or service to get another for free.

The psychological strategy at work here is, simply, greed. Once a customer comes across the offer, logic gets tossed to the wind and the main focus is making a purchase to get the free item.

Now, because this technique has been widely adopted and most people no longer take the bait, you could stir things up a bit by offering one of the following: - Buy one and get 25 percent off your next purchase.

- Purchase one and get four bonuses valued at $60, for free.

- Buy one, get three for free.

To fully maximize this strategy, get creative with your discount offers.

‘BOGOF’ BUY ONE, GET ONE FREE. This is a pricing strategy in which customers pay the full price for one product or service to get another for free.

The psychological strategy at work here is, simply, greed. Once a customer comes across the offer, logic gets tossed to the wind and the main focus is making a purchase to get the free item.

Now, because this technique has been widely adopted and most people no longer take the bait, you could stir things up a bit by offering one of the following: - Buy one and get 25 percent off your next purchase.

- Purchase one and get four bonuses valued at $60, for free.

- Buy one, get three for free.

To fully maximize this strategy, get creative with your discount offers.

32

Comparative pricing: placing expensive next to standard

Comparative pricing may be tagged as the most effective psychological pricing strategy. This simply involves offering two similar products simultaneously but making one product’s price much more attractive than the other.

To the average human, if something is expensive, then it is “quality.”

This is a psychological game of choice for the customer, who has to choose between two products that are similar but have different prices.

This strategy works well with fashion brands, which place side by side tuxedos with similar quality but different prices, to make customers pick the more expensive one, which is the desired purchase.

A perfect illustration of this strategy would be the case study on “The Williams-Sonoma bread maker”.

VISUALLY HIGHLIGHT THE DIFFERENT PRICES

To make the new pricing strategy work effectively, use the psychological trick of changing the font, size and color of the new price.

When you offer a sale with a previous price side by side with a new one, you make more sales because customers feel they are getting a bargain and are not interested in researching the drop in price.

This trick triggers a fluency effect and consumers interpret the visual difference to a larger numeral distinction, according to 2005 research by Keith Coulter and Robin Coulter.

According to that research, simply changing the font, size and color of the signage for the current sale price and placing it a little bit away from the previous pricing will increase the number of purchases, because customers see the new price as cheaper and a better deal than the previous price.

Tip: The pricing difference should be no more than $10.

When you offer a sale with a previous price side by side with a new one, you make more sales because customers feel they are getting a bargain and are not interested in researching the drop in price.

To make the new pricing strategy work effectively, use the psychological trick of changing the font, size and color of the new price.

This trick triggers a fluency effect and consumers interpret the visual difference to a larger numeral distinction, according to 2005 research by Keith Coulter and Robin Coulter.

According to that research, simply changing the font, size and color of the signage for the current sale price and placing it a little bit away from the previous pricing will increase the number of purchases, because customers see the new price as cheaper and a better deal than the previous price.

Tip: The pricing difference should be no more than $10.

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NE, ’ BUY O ‘BOGOF .

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34

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RATIV COMPA : G PRICIN G IN C PLA IVE EXPENS O T T X NE RD STANDA

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37

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38

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39

£40 Prestige pricing is the complete opposite of odd or charm pricing.

Prestige pricing involves making all numerical values into rounded figures, i.e., $99.99 is converted to $100.

You may be wondering why.

According to Kuangjie Zhang and Monica Wadhwa in a 2015 study, rounded numbers (e.g., $100) are more fluently processed and encourage reliance on consumers’ feelings, compared to non-rounded numbers (e.g., $99.99), which are less fluently processed, and encourage reliance on cognition.

This means that rounded numbers “feel right” because the purchase is being driven by feelings and the price is processed quickly.

Zhang and Wadhwa realized that consumers were more inclined to buy a bottle of champagne when it was priced at $40.00, rather than $39.72 or $40.28.

£40 Prestige pricing is the complete opposite of odd or charm pricing.

Prestige pricing involves making all numerical values into rounded figures, i.e., $99.99 is converted to $100.

You may be wondering why.

According to Kuangjie Zhang and Monica Wadhwa in a 2015 study, rounded numbers (e.g., $100) are more fluently processed and encourage reliance on consumers’ feelings, compared to non-rounded numbers (e.g., $99.99), which are less fluently processed, and encourage reliance on cognition.

This means that rounded numbers “feel right” because the purchase is being driven by feelings and the price is processed quickly.

Zhang and Wadhwa realized that consumers were more inclined to buy a bottle of champagne when it was priced at $40.00, rather than $39.72 or $40.28.

5

£40 Prestige pricing is the complete opposite of odd or charm pricing.

Prestige pricing involves making all numerical values into rounded figures, i.e., $99.99 is converted to $100.

You may be wondering why.

According to Kuangjie Zhang and Monica Wadhwa in a 2015 study, rounded numbers (e.g., $100) are more fluently processed and encourage reliance on consumers’ feelings, compared to non-rounded numbers (e.g., $99.99), which are less fluently processed, and encourage reliance on cognition.

This means that rounded numbers “feel right” because the purchase is being driven by feelings and the price is processed quickly.

Zhang and Wadhwa realized that consumers were more inclined to buy a bottle of champagne when it was priced at $40.00, rather than $39.72 or $40.28.

40

7

£40 Prestige pricing is the complete opposite of odd or charm pricing.

Prestige pricing involves making all numerical values into rounded figures, i.e., $99.99 is converted to $100.

You may be wondering why.

According to Kuangjie Zhang and Monica Wadhwa in a 2015 study, rounded numbers (e.g., $100) are more fluently processed and encourage reliance on consumers’ feelings, compared to non-rounded numbers (e.g., $99.99), which are less fluently processed, and encourage reliance on cognition.

This means that rounded numbers “feel right” because the purchase is being driven by feelings and the price is processed quickly.

Zhang and Wadhwa realized that consumers were more inclined to buy a bottle of champagne when it was priced at $40.00, rather than $39.72 or $40.28.

9

E REDUC RICING: P E M N R O A CH S BY T DIGIT THE LEF

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41

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Reduce the left digits by one This strategy, often called “charm pricing,” involves using pricing that ends in “9” and “99.”

With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention. For example, your brain processes $3.00 and $2.99 as different values: To your brain $2.99 is $2.00, which is cheaper than $3.00.

How is this technique effective? It all boils down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called “the left-digit effect in price cognition.” They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains unchanged (e.g., $3.60 to $3.59).”

In an experiment conducted by the University of Chicago and MIT, women’s clothing was used to test the left-digit effect. First, prices were set for $34, $39 and $44. To the amazement of the researchers, the items sold best at $39 even though that price was more expensive than other options.

So, the message here is, if you want to increase purchases of your products and services, convert zero ending numbers to nines. A perfect example of this strategy can be found on Apple’s website, where each product price ends with a 9.

A postscript: Keith Coulter, associate professor of marketing at the Graduate School of Management, Clark University, has suggested that this effect may be enhanced when the cents are printed in a smaller font.

Reduce the left digits by one This strategy, often called “charm pricing,” involves using pricing that ends in “9” and “99.”

With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention. For example, your brain processes $3.00 and $2.99 as different values: To your brain $2.99 is $2.00, which is cheaper than $3.00.

How is this technique effective? It all boils down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called “the left-digit effect in price cognition.” They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains unchanged (e.g., $3.60 to $3.59).”

42

In an experiment conducted by the University of Chicago and MIT, women’s clothing was used to test the left-digit effect. First, prices were set for $34, $39 and $44. To the amazement of the researchers, the items sold best at $39 even though that price was more expensive than other options.

So, the message here is, if you want to increase purchases of your products and services, convert zero ending numbers to nines. A perfect example of this strategy can be found on Apple’s website, where each product price ends with a 9.

A postscript: Keith Coulter, associate professor of marketing at the Graduate School of Management, Clark University, has suggested that this effect may be enhanced when the cents are printed in a smaller font.

Reduce the left digits by one This strategy, often called “charm pricing,” involves using pricing that ends in “9” and “99.”

With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention. For example, your brain processes $3.00 and $2.99 as different values: To your brain $2.99 is $2.00, which is cheaper than $3.00.

How is this technique effective? It all boils down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called “the left-digit effect in price cognition.” They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains unchanged (e.g., $3.60 to $3.59).”

In an experiment conducted by the University of Chicago and MIT, women’s clothing was used to test the left-digit effect. First, prices were set for $34, $39 and $44. To the amazement of the researchers, the items sold best at $39 even though that price was more expensive than other options.

So, the message here is, if you want to increase purchases of your products and services, convert zero ending numbers to nines. A perfect example of this strategy can be found on Apple’s website, where each product price ends with a 9.

A postscript: Keith Coulter, associate professor of marketing at the Graduate School of Management, Clark University, has suggested that this effect may be enhanced when the cents are printed in a smaller font.

Reduce the left digits by one This strategy, often called “charm pricing,” involves using pricing that ends in “9” and “99.”

With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention. For example, your brain processes $3.00 and $2.99 as different values: To your brain $2.99 is $2.00, which is cheaper than $3.00.

How is this technique effective? It all boils down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called “the left-digit effect in price cognition.” They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains unchanged (e.g., $3.60 to $3.59).”

In an experiment conducted by the University of Chicago and MIT, women’s clothing was used to test the left-digit effect. First, prices were set for $34, $39 and $44. To the amazement of the researchers, the items sold best at $39 even though that price was more expensive than other options.

So, the message here is, if you want to increase purchases of your products and services, convert zero ending numbers to nines. A perfect example of this strategy can be found on Apple’s website, where each product price ends with a 9.

A postscript: Keith Coulter, associate professor of marketing at the Graduate School of Management, Clark University, has suggested that this effect may be enhanced when the cents are printed in a smaller font.

Reduce the left digits by one This strategy, often called “charm pricing,” involves using pricing that ends in “9” and “99.”

With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention. For example, your brain processes $3.00 and $2.99 as different values: To your brain $2.99 is $2.00, which is cheaper than $3.00.

How is this technique effective? It all boils down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called “the left-digit effect in price cognition.” They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains unchanged (e.g., $3.60 to $3.59).”

In an experiment conducted by the University of Chicago and MIT, women’s clothing was used to test the left-digit effect. First, prices were set for $34, $39 and $44. To the amazement of the researchers, the items sold best at $39 even though that price was more expensive than other options.

So, the message here is, if you want to increase purchases of your products and services, convert zero ending numbers to nines. A perfect example of this strategy can be found on Apple’s website, where each product price ends with a 9.

A postscript: Keith Coulter, associate professor of marketing at the Graduate School of Management, Clark University, has suggested that this effect may be enhanced when the cents are printed in a smaller font.

43

44 To fully maximize this strategy, get creative with your discount offers.

- Buy one and get 25 percent off your next purchase.

- Purchase one and get four bonuses valued at $60, for free.

- Buy one, get three for free.

Now, because this technique has been widely adopted and most people no longer take the bait, you could stir things up a bit by offering one of the following:

The psychological strategy at work here is, simply, greed.

Once a customer comes across the offer, logic gets tossed to the wind and the main focus is making a purchase to get the free item.

This is a pricing strategy in which customers pay the full price for one product or service to get another for free.

BOGOF: BUY ONE, GET ONE FREE

S A L E

This is a pricing strategy in which customers pay the full price for one product or service to get another for free.

The psychological strategy at work here is, simply, greed.

Once a customer comes across the offer, logic gets tossed to the wind and the main focus is making a purchase to get the free item.

Now, because this technique has been widely adopted and most people no longer take the bait, you could stir things up a bit by offering one of the following: - Buy one and get 25 percent off your next purchase.

- Purchase one and get four bonuses valued at $60, for free.

- Buy one, get three for free.

To fully maximize this strategy, get creative with your discount offers.

The psychological strategy at work here is, simply, greed.

Once a customer comes across the offer, logic gets tossed to the wind and the main focus is making a purchase to get the free item.

Now, because this technique has been widely adopted and most people no longer take the bait, you could stir things up a bit by offering one of the following:

- Buy one and get 25 percent off your next purchase.

- Purchase one and get four bonuses valued at $60, for free.

- Buy one, get three for free.

To fully maximize this strategy, get creative with your discount offers.

Buy one, get one free

This is a pricing strategy in which customers pay the full price for one product or service to get another for free.

Buy one, get one free

45

46 The psychological strategy at work here is, simply, greed.

Once a customer comes across the offer, logic gets tossed to the wind and the main focus is making a purchase to get the free item.

Now, because this technique has been widely adopted and most people no longer take the bait, you could stir things up a bit by offering one of the following: - Buy one and get 25 percent off your next purchase.

- Purchase one and get four bonuses valued at $60, for free.

- Buy one, get three for free.

To fully maximize this strategy, get creative with your discount offers.

The psychological strategy at work here is, simply, greed.

Once a customer comes across the offer, logic gets tossed to the wind and the main focus is making a purchase to get the free item.

Now, because this technique has been widely adopted and most people no longer take the bait, you could stir things up a bit by offering one of the following:

- Buy one and get 25 percent off your next purchase.

- Purchase one and get four bonuses valued at $60, for free.

- Buy one, get three for free.

To fully maximize this strategy, get creative with your discount offers.

Buy one, get one free This is a pricing strategy in which customers pay the full price for one product or service to get another for free.

Buy one, get one free

This is a pricing strategy in which customers pay the full price for one product or service to get another for free.

To fully maximize this strategy, get creative with your discount offers.

- Buy one and get 25 percent off your next purchase.

- Purchase one and get four bonuses valued at $60, for free.

- Buy one, get three for free.

Now, because this technique has been widely adopted and most people no longer take the bait, you could stir things up a bit by offering one of the following:

The psychological strategy at work here is, simply, greed.

Once a customer comes across the offer, logic gets tossed to the wind and the main focus is making a purchase to get the free item.

This is a pricing strategy in which customers pay the full price for one product or service to get another for free.

Buy one, get one free

When you offer a sale with a previous price side by side with a new one, you make more sales because customers feel they are getting a bargain and are not interested in researching the drop in price.

To make the new pricing strategy work effectively, use the psychological trick of changing the font, size and color of the new price.

This trick triggers a uency effect and consumers interpret the visual difference to a larger numeral distinction, according to 2005 research by Keith Coulter and Robin Coulter.

According to that research, simply changing the font, size and color of the signage for the current sale price and placing it a little bit away from the previous pricing will increase the number of purchases, because customers see the new price as cheaper and a better deal than the previous price.

When you offer a sale with a previous price side by side with a new one, you make more sales because customers feel they are getting a bargain and are not interested in researching the drop in price.

To make the new pricing strategy work effectively, use the psychological trick of changing the font, size and color of the new price.

This trick triggers a uency effect and consumers interpret the visual difference to a larger numeral distinction, according to 2005 research by Keith Coulter and Robin Coulter.

According to that research, simply changing the font, size and color of the signage for the current sale price and placing it a little bit away from the previous pricing will increase the number of purchases, because customers see the new price as cheaper and a better deal than the previous price.

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strategies of psychological pricing

£40 Prestige pricing is the complete opposite of odd or charm pricing.

Prestige pricing involves making all numerical values into rounded figures, i.e., $99.99 is converted to $100.

You may be wondering why.

According to Kuangjie Zhang and Monica Wadhwa in a 2015 study, rounded numbers (e.g., $100) are more fluently processed and encourage reliance on consumers’ feelings, compared to non-rounded numbers (e.g., $99.99), which are less fluently processed, and encourage reliance on cognition.

This means that rounded numbers “feel right” because the purchase is being driven by feelings and the price is processed quickly.

Zhang and Wadhwa realized that consumers were more inclined to buy a bottle of champagne when it was priced at $40.00, rather than $39.72 or $40.28.

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This is a pricing strategy in which customers pay the full price for one product or service to get another for free.

The psychological strategy at work here is, simply, greed.

Once a customer comes across the offer, logic gets tossed to the wind and the main focus is making a purchase to get the free item.

Now, because this technique has been widely adopted and most people no longer take the bait, you could stir things up a bit by offering one of the following: - Buy one and get 25 percent off your next purchase.

- Purchase one and get four bonuses valued at $60, for free.

- Buy one, get three for free.

To fully maximize this strategy, get creative with your discount offers.

This is a pricing strategy in which customers pay the full price for one product or service to get another for free.

The psychological strategy at work here is, simply, greed.

Once a customer comes across the offer, logic gets tossed to the wind and the main focus is making a purchase to get the free item.

Now, because this technique has been widely adopted and most people no longer take the bait, you could stir things up a bit by offering one of the following: - Buy one and get 25 percent off your next purchase.

- Purchase one and get four bonuses valued at $60, for free.

- Buy one, get three for free.

To fully maximize this strategy, get creative with your discount offers.

Buy one, get one free

49

This strategy, often called “charm pricing,” involves using pricing that ends in “9” and “99.”

With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention. For example, your brain processes $3.00 and $2.99 as different values: To your brain $2.99 is $2.00, which is cheaper than $3.00.

How is this technique effective? It all boils down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called “the left-digit effect in price cognition.” They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains unchanged (e.g., $3.60 to $3.59).”

In an experiment conducted by the University of Chicago and MIT, women’s clothing was used to test the left-digit effect. First, prices were set for $34, $39 and $44. To the amazement of the researchers, the items sold best at $39 even though that price was more expensive than other options.

So, the message here is, if you want to increase purchases of your products and services, convert zero ending numbers to nines. A perfect example of this strategy can be found on Apple’s website, where each product price ends with a 9.

A postscript: Keith Coulter, associate professor of marketing at the Graduate School of Management, Clark University, has suggested that this effect may be enhanced when the cents are printed in a smaller font.

Reduce the left digits by one This strategy, often called “charm pricing,” involves using pricing that ends in “9” and “99.”

With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention. For example, your brain processes $3.00 and $2.99 as different values: To your brain $2.99 is $2.00, which is cheaper than $3.00.

How is this technique effective? It all boils down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called “the left-digit effect in price cognition.” They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains unchanged (e.g., $3.60 to $3.59).”

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In an experiment conducted by the University of Chicago and MIT, women’s clothing was used to test the left-digit effect. First, prices were set for $34, $39 and $44. To the amazement of the researchers, the items sold best at $39 even though that price was more expensive than other options.

So, the message here is, if you want to increase purchases of your products and services, convert zero ending numbers to nines. A perfect example of this strategy can be found on Apple’s website, where each product price ends with a 9.

A postscript: Keith Coulter, associate professor of marketing at the Graduate School of Management, Clark University, has suggested that this effect may be enhanced when the cents are printed in a smaller font.

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Placing expensive next to standard Comparative pricing may be tagged as the most effective psychological pricing strategy.

This simply involves offering two similar products simultaneously but making one product's price much more attractive than the other.

This is a psychological game of choice for the customer, who has to choose between two products that are similar but have different prices.

This strategy works well with fashion brands, which place side by side tuxedos with similar quality but different prices, to make customers pick the more expensive one, which is the desired purchase.

To the average human, if something is expensive, then it is "quality."

A perfect illustration of this strategy would be the case study on “The Williams-Sonoma bread maker�.

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