Would you like to take your sales to the next level? Then it’s time to apply the psychological pricing strategy.
This consists of showing a price that has a super impact on your customer’s mind which makes it easier for them to make a purchase decision.
Yes, believe it or not, there are prices that can provoke positive or negative reactions in the user’s mind, and it is a connection that is established automatically.
So from now on you will try to focus on your customer’s emotions and, do you know what the best part is? You don’t necessarily have to sell at lower prices, as there are values that can achieve more sales without being cheaper.
Are you interested in knowing how to apply it? Sign up and find out below:
Table of Content
- What is psychological pricing?
- Why do psychological pricing strategies work?
- Strategies for creating psychological pricing in your business
- Examples of companies that have applied psychological pricing
- 5 Types of psychological pricing
What is psychological pricing?
Well, let’s start with the most basic thing, which is to define what psychological pricing is.
It’s an essentially commercial strategy in which a business decides to lower the price of its products for a more rounded one that provokes a positive reaction in the customer.
Just as you read it, there are prices that can generate more sales regardless of whether they are cheaper or more expensive than others. Therefore, it’s a technique that seeks to penetrate the user’s emotions in order to motivate them to buy our products and services.
The customer’s mind is a subject worthy of study. On many occasions, no matter what benefits a product has, people buy because of motivations, fears, emotions and finally logical thinking, so you must adapt to this in order to achieve massive sales.
This way, prices can provoke positive or negative reactions that directly influence the purchase decision. This makes the development of pricing strategies necessary to ensure the stability of the business in the medium and long term.
Why do psychological pricing strategies work?
Psychological pricing has been studied by many institutes, and it has such a strong influence on the user’s purchasing decisions that hardly anyone could explain why.
That’s how the Mit and the University of Chicago got down to work and did a study on the effect of rounded prices. The values were set at USD 34.39 and USD 44 respectively, and the results were more than striking.
The products with the highest number of sales were those priced at USD 34.99, while those priced at USD 44 came in second place.
This is how the 9 factor strategy was developed. Simply put, it’s about placing prices that end in 9 or .99, as these have a positive psychological effect on the user, even more so than whole prices that are cheaper.
The study also showed that purchasing decisions can be influenced through the customer’s emotions. Therefore, prices have an effect on the user’s subconscious, which can motivate or push away the purchase of a product.
Now you know, don’t choose the price at random if you don’t want to be forgotten by your target audience.
Strategies for creating psychological pricing in your business
Interested in creating a psychological pricing strategy to boost sales? It’s time to take a look at 6 different ways to leverage this practice.
Get ready to rotate that merchandise in no time.
1. No whole numbers
If you want to create a psychological pricing strategy, it’s essential that you forget about whole numbers forever. Remember the results of the University of Chicago and the Mit study, the use of digits gives the feeling that you are paying less, so the customer thinks the product is cheaper.
You see? It’s an emotional issue and whole numbers will be your enemy in this strategy – ditch them once and for all and the results will surprise you!
2. Differentiate product costs from shipping costs.
Yes, believe it or not, this works. Differentiating the price of the product from the value of the shipping will help you generate more sales because the product alone is usually cheaper than if you add the shipping cost.
However, at some point in the checkout process you will need to show the total price for the whole package. Apply this and you will see how users will choose you over the competition.
3. Divide the total cost
How about dividing the total price of the item into different instalments from now on? This strategy is very useful when you are selling an expensive service, since it’s not the same to see a price of 1,000 dollars on the billboard than 5 instalments of 200 dollars for 12 months.
Yes, we know that even with this practice the customer will pay more if you apply some interest, but this is the way the user’s mind works and there is nothing we can do about it.
4. Fixed prices per period of time
Fixed prices per time period are very common in internet services such as streaming. If you think about it, it makes a lot of sense because you pay a fixed price for quite a long time, so you forget about what might happen in the medium term.
However, if you are selling such a service, it’s very important that you clearly communicate the terms of the project. Although there is a fixed price, it does not mean that it cannot change over time.
5. Highlight discounts
Have you ever bought a product just because it was on discount? Come on, don’t feel bad, we’ve done it too, and sometimes there are opportunities that we just can’t pass up.
The fact is that discounts are a great way to increase sales as long as it doesn’t affect your profits or the sustainability of your business.
Therefore, if you want to apply a discount on your products, do it, but remember to emphasise this so that the customer notices it. Once the customer sees the savings they will make, there is a good chance that they will buy, so don’t think twice.
6. Don’t forget the percentages
This is closely linked to the previous point. When you run discounts you can add percentages to be more emphatic about the reduction on the original price.
So, instead of saying: “We have this laptop at $200 less than its original value”, say: “Buy this computer at 30% off before it’s sold out”. Which one would you buy?
Examples of companies that have applied psychological pricing
Psychological pricing has generated such good results that several of the world’s largest companies apply it constantly, especially at times like Christmas, Halloween or Valentine’s Day.
Would you like to see how the professionals do it so you can replicate it in your business? Take a look at it now:
We’re not saying anything new when we say that Amazon is the leader in e-commerce worldwide. Well, one of the reasons for its success is thanks to the psychological pricing strategies they have applied all this time.
One of the methods they use is the percentage of savings to make it clear to the customer how much they will save if they buy the product at that moment.
This way, the user buys the service because he’s getting a benefit for his pocket in addition to the item itself.
We start with the leading retailer in the USA. They were one of the first to popularise “Black Friday”. It’s Thanksgiving Day in the US and the idea is to attract as many people to the shops as possible.
What happens on that day? This is the date when there are the best deals due to the psychological pricing strategy, to the point that they sell products that are out of season or that have not yet been officially released on the market.
That’s why you’ll see mental triggers like “limited time”, “2 for 1” discounts and offers that are unmissable for many.
Apple is an expert in using psychological pricing to maintain their sales levels.
In this case, they like to apply the argument of exclusivity to the public that loves to consume high-end products. And do you know what the best thing is? It gives them extraordinary results.
They currently have 22% of the smartphone market, 16% of the mobile operating systems and are the third most popular PC brand at the moment.
Rexona is a leading brand in personal care products. We are sure that in the last month, you’ve seen several commercials on TV where they promote their super deodorant that will allow you to sweat for three consecutive days without leaving any traces of bad smell.
Well, to maintain their sales they apply pricing strategies, specifically the practice of “round pricing”.
The objective is to give a closed price to the product so that the user has no rational doubts about whether or not to buy. Have you ever seen those promotions in the supermarket of 1 for 7 euros and 2 for 10 euros? Well, this is a perfect example of how rounded pricing works.
You’ll think that you’re paying less so of course you’ll buy.
5 Types of psychological pricing
Have you decided to use psychological pricing as a strategy in your business? Well, now it’s time for you to take a look at the different types that exist today so that you can choose the best one for each moment.
Do you dare?
1. Round price
We know that at the beginning of this article we mentioned that round prices are not very recommendable for attracting users, but there are times when they are the exception.
When can you use them? When you are promoting a product that is bought impulsively and on a whim, leaving the need in the background.
This way, the customer is led to believe that their purchase is “perfect”, so they feel wonderful even though they made a purchase that may not be of any use to them.
2. Typical price
Now it’s time to talk about the usual price. These are the values we add to the items that are most common.
If you are a regular visitor to an establishment or supermarket, you will surely have noticed that there are products that, no matter how much time passes, always have the same price. Well, in most cases this is done purely as an advertising strategy, nothing more.
3. Odd price
Few people take advantage of odd prices on products.
Believe it or not, the user’s mind processes that the item is cheaper than it really is, so they run to buy it before it runs out of stock.
To apply it well, we recommend that you use 5 or 9 to provoke a positive reaction in the public.
4. Relative pricing
This is a strategy where you set the price according to what the competition is doing. So, if it’s an item that can be found in other shops or there are products that have similar characteristics, you will have to add a price that will attract the user without causing losses to the company.
5. Prestige price
Finally we find the prestige price, one that gives you more benefits than you can imagine if you apply it correctly.
It’s applied to products that are worth adding a slightly higher price than normal in order to awaken a sense of exclusivity and quality in the customer’s mind.
Both mental triggers are among the most powerful in attracting people’s attention, so if your product has sufficient quality and guarantee, you can execute this strategy.
It’s amazing what we can achieve with psychological pricing. The truth is that every day we buy without thinking about what is behind every advertisement, message or product price.
So we hope that with this information you will understand how you can use this strategy to maintain strong and stable sales over the long term.
Do you know of other psychological pricing strategies?