Friday, August 05, 2022

Psychological pricing

Pricing can be used as a marketing strategy or as a way to increase perceptions of quality. Sometimes it’s baked directly into a brand’s ethos. Implementing a well-considered pricing strategy involves researching competitors, understanding the target audience, and keeping up to date with trends and changes in the market.

Psychological pricing is used to influence a customer’s spending or shopping habits to make more or higher value sales. It is a pricing strategy that utilizes the power of psychology or the subconscious to influence customers to spend more. Psychological pricing is part of wider pricing strategy. It’s a strategy in itself with numerous tactics that are designed to appeal to a customer’s emotional, rather than rational, response to prices.

Research has shown that certain ways of formatting prices can spark a subconscious response from a customer and encourage a purchase. Inexpensive and easy to implement, these tactics can be used in addition to pricing strategies to boost their effectiveness.

There are 6 types of psychological pricing
*Charm pricing and odd-even pricing - Psychological pricing also relies on simple changes that trick the brain. Businesses knock a rounded dollar figure down by one cent. An item that is priced $3.99 but conveyed by the consumer as 3 dollars and not 4 dollars, treating $3.99 as a lower price than $4.00.
*Slashing the MSRP
*Artificial time constraints - Stores employ time restrictions because they act as a catalyst for consumers to spend. The psychological tactic creates a sense of fear in consumers. If they don’t act now, they risk missing out.
*Innumeracy
*Price appearance - How a price looks to the naked eye impacts the psyche. Longer prices appear to be more expensive than shorter prices, even if they’re the same number.
*Flat-rate bias
Psychological pricing

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