Psychological pricing always wins
Oct 19 Pricing
The price is one of the most important features when it comes to sell a product. Psychological pricing is a marketing strategy based on the theory that some prices have a more psychological impact on costumers than others. So, if you apply this kind of pricing strategy to your item, it is more likely that the costumer is going to buy it. Not even looking at the one next to it which has a non psychological price. Below, you can find five psychological pricing strategies that entrepreneurs can look at:
1. “Charm pricing”: Reduce the left digit by one
With charm pricing we mean that kind of strategy where the prices end with “9” or “99”. Consumers tend to perceive this kind of prices as being significantly lower than what they really are. Thus, with items that have such a price, like 1.99, is more likely that the costumer feels like spending 1 rather than 2.
2. “Prestige” price strategy
On the other hand the prestige strategy is the complete opposite of the charm pricing. It consists on using all numerical numbers into rounded figures, like 99.99 is converted in 100.
According to a study conducted in 2015 rounded numbers (100) are more fluently processed and push reliance on costumers’ feelings. Non rounded numbers (99.99) are less fluently processed and encourage reliance on recognition. In other words, feelings drive the purchases when it comes to rounded numbers. It “feel right” and the price is processed quickly.
3. “BOGOF”: Buy one, get one free
With this strategy the costumer is going to pay the full price for a specific item or service to get one for free. The “magic” word free is like a magnet for our brain. When we come face to face with this pricing strategy the only thing we can think of is to get it free.
Since this kind of strategy has been overused on the market, people don’t pay that much attention to it anymore. For this reason, you can cheer things up by offering one of the following:
Actually, the beauty of this pricing strategy is that you can invent what kind of offer you prefer to put on the market. So, get creative!
4. Comparative pricing: placing expensive next to standard
Comparative pricing can be seen as the most effective one on the market. The aim of the strategy is to put close one another similar items but with different price. This strategy works well with the fashion brands because they put next one another products with similar quality but completely different prices. In most cases the most expensive item wins because usually we associate expensive with good quality.
5. Visually highlight the different prices
When you offer an item with the old and the new (discounted) price side by side, you make more sales because costumers feel like they are making a deal. In these terms they are not interested in researching the drop in price.
One more important thing in making this kind of strategy is to work from the psychological point of view. An example is changing the font, size and color of the new price.
Given the psychological strategies, you can choose whatever fits best your business. Once you’ve made this decision, Competitoor can help you tracking the price of your dealers or competitors. In this way you will be up to date of any changes. If a retailer is dropping the price of your item way to fast you get to know it, and you can solve the problem very fast without loosing money. For instance, the Competitoor’s starter plan costs only 59 euros per month, it’s easy and intuitive to use and it allows you to track 50-100 products on 4-5 competing sites.