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
