strategies of psychological pricing
£40
0 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.
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
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.
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.
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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�.