What is Psychological Pricing?
Let’s be real, shopping for just the items you planned to buy at a store nowadays is hard. You could walk into a store looking for something as simple as toilet paper but leave with a mountain of stuff because they were on “sale”. After getting home from that shopping trip, you might question yourself on why you bought so much stuff and the answer to that question is that store’s usage of psychological pricing.
Psychological pricing is a marketing tool that attempts to give customers an added sense of value when purchasing their products. Whether they’re attempting to convince you that you’re saving money on a product to make you feel like you’re investing in a high-quality item, their goal is to meet your psychological “justification” for their item.
How Does Psychological Pricing Work?
Psychological pricing, however, only works when you don’t realize the actual cost behind the item you’re buying. For example, if you knew that an 8-pack of batteries cost around 20 to 30 cents to produce. You would probably hesitate to buy a similar 8-pack of batteries for $6 dollars. This fact, quite honestly, gets overlooked most of the time as most vendors of generic products price their items at similar prices to avoid nosy customers investigating their average buying price.
What Are Common Methods of Psychological Pricing?
As far as techniques go for psychological pricing, the most common method you see used at stores is called the left-digit effect. As humans, we typically read things from left to right no matter what we’re reading. This way of reading causes us to become biased towards the first digit we encounter on a product.
To put this into perspective, imagine two identical cans of soup being sold at a supermarket for two different prices. The first can is presented as $4.00 flat and the other can is being sold at the price of $3.99. Because our brain reads from the left, the first number on the $3.99 pricing label seems a lot closer to $3.00 than the $4.00 can. An example of this psychological strategy in action can often be seen in grocery stores like the one pictured below!
Another technique that is commonly used today is changing the price appearance of your item. By removing the zeros at the end of any price tag, a sense of quality is associated with it in our minds. This is typically why most restaurant menus chop off the decimals at the end of their item’s prices! For example, here is a coffee shop’s a la carte menu displaying this psychological pricing effect:
While there are more techniques inside of the psychological pricing umbrella, this field of pricing is still a relatively new subject being explored today. With that being said, it’s important to implement these found techniques without experimenting with them. Even though, you might never find that “sweet spot” price that will make both you and your customers happy this is a great technique to implement in your marketing strategy.
Corkboard Concepts works hard to make sure that our pricing is customizable and fits the needs of our clients. To learn more about building a marketing strategy that works for you, please see our services.