Psychological pricing is a pricing strategy that plays into the way our brains work without us even realizing. Have you ever noticed that many prices have 9s in them? It’s not a coincidence. I will go into each of the 5 psychological strategies here and below you’ll find the full infographic, Leveraging Psychological Pricing to Boost Sales.
1. Charm Pricing
9 is what some call a charm number because shoppers love it. It’s been proven to make them more likely to buy. Products with 9s in them sell 24% more than other products. MIT and the University of Chicago did a study on this phenomenon to learn more. They set up a study with women’s clothing priced at $34, $39, and $44. Surprisingly, they found that more women bought the products that were priced at $39–even though there was a cheaper option!
2. Tiered Pricing
Having multiple products at different price points helps retailers steer shoppers to certain products by making them seem like a great deal.
Tiered pricing worked incredibly well for Williams Sonoma. The cookware retailer began carrying a bread maker, but sales were few and far between. What the company did next was pretty counterintuitive, unless viewed from a psychological pricing standpoint. Williams Sonoma added yet another bread maker to its inventory — but charged 50% more for it. This was incredibly effective because the original model began to seem like a bargain next to the deluxe model and sales picked up.
3. Relative and Anchor Pricing
On a related note, the next strategy involves providing alternative prices to make the best deal stand out. Relative pricing is useful for sales and discounts. Can you think of anything you’ve ever seen on sale that didn’t have the original price visible for reference? This also relates to charm pricing because a price with a 9 that has a higher original price is the only thing that can beat a charm price alone. A shirt that has been marked down to $19.99 from $27? People will be all over that.
Anchor pricing means that it is the first price that shoppers see, so they compare all other price points to it.
4. Limited Time Pricing
Coupons almost always have expiration dates. Do you know why? To get you in the door or on the website sooner rather than later. Time sensitive discounts are effective because they create a sense of urgency and 73% of shoppers are influenced by discounts.
5. Dynamic Pricing
The last thing you want is a price that is static. EDLP (every day low pricing) may seem like a great idea, but given the importance of relative pricing for sales and discounts, it may backfire. Another thing to keep in mind is that ecommerce is constantly fluctuating: online retail giants reprice constantly and the products they carry change often. That means your relative price compared to your competitors could become less than ideal without warning.
Want more information on these 5 tips? View the full psychological pricing infographic below:
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Contributing Editor: Angelica Valentine, Content Marketer at Wiser.