Pricing Psychology: 7 Proven Techniques Marketers Need

Today we’re going to dive into the world of pricing psychology.

Don’t worry, we won’t be analysing your mental state when you fork over $5 for a latte. Instead, we’ll be exploring the lesser-known ways that businesses use pricing to manipulate our brains into thinking we’re getting a good deal (or at least not a bad one).

We’re about to uncover the tricks of the trade that make you think twice before hitting that “Add to Cart” button.

Pricing psychology refers to the study of how pricing affects consumer behaviour and decision-making.

It is like a game of chess, but instead of moving knights and pawns, businesses are moving around price tags like it’s a strategic dance-off.

Once you have an understanding of the pricing psychology hacks and how they can work to convince shoppers to buy, it’s time to start putting them into practice.

Before you do that, however, there are a few key things you should keep in mind:

• Be careful not to go overboard with discounts or bundle offers – too many discounts will devalue your product in shoppers’ eyes.
• Don’t be afraid of higher prices – research has shown that people associate higher prices with better quality products, so don’t be afraid to charge more for your goods if it means providing a top-notch experience for customers.
• Going back to the point above – we would discourage you to charge higher pricing for the sake of going higher. Think about the value you are providing, effort and hands-on support and adjust your price accordingly.

Once you’ve got these basics in mind, it’s time to get creative with your pricing strategies.

Here are some of our favourite psychology hacks that you can implement to increase conversions and boost sales:

The 99-cent Product

We talked about this before on the podcast, because it’s such a good hack.

Picture this: you can solve a small problem that your target audience is facing, and offer up a sweet solution for just 99 cents. It’s like a vending machine snack, only much better for your business. You could whip up an e-book, create a quick course or offer a small trial of your product, and boom, you’re in business!

By offering something seemingly small, affordable and accessible, you make it easy-peasy for potential customers to try it out and see what you’re all about.

Not only can this hack attract new leads, but it can also make your existing customers feel valued too.

So, let’s say you’re a pro at something like designing websites, arranging bouquets or selling vegan cookies – whatever it is, show off your expertise with a valuable resource priced at a mere 99 cents. It’s like giving people that tantalizing first taste of a new kind of ice cream – they’ll be wanting more in no time.

The Anchoring Effect

There are a few ways to approach the anchoring effect. Some of which, in our opinion, can get a bit sleazy. Our favourite way is to break down the value of the product upfront to make the following prices look like a great deal.

Let’s say you present a new microphone with features worth over £200 (such as integrated noise reduction, six modalities etc) available for “only” £60.

Odd-Number Pricing

Are you more likely to buy something if it’s priced at £19.99 instead of £20?

You’re not alone, as people perceive prices ending in odd numbers as more affordable than those ending in even numbers. And we must admit, that one cent difference makes a bigger impact than you’d expect.

If you’re going to use this pricing strategy, the most effective way to do it is in a promotion and to show the original price alongside it.

For instance, when you see something advertised as “was £9.50, now only £7.99!“, the discount seems much larger, and you’re more likely to buy it.

This is because you’re not only seeing the lower price, but you’re also aware of the original price, making the discount seem even bigger.

According to research, people see a larger difference between prices like $8.00 vs. $6.99 compared to $8.01 vs. $7.00, even though the price difference is the same.

Price Bundling

Picture this: you want to buy an iPad for £950, but you see that if you buy the iPad and an iPhone together, you’ll save £200.

Suddenly you’re rethinking the purchase and considering getting two products instead of one.

That’s the power of price bundling, where related products or services are offered at a discounted price when purchased together to entice you to spend more.

Perceived Value

Businesses not only want to sell you their product or service, but they also want you to see the value in it – based on the PAS framework.

So instead of focusing on the price, they promote the benefits and value of the product or service to make it more attractive to you.

That way, you’ll think less about the money you’re spending and focus more on the value you’re getting.

For example, our course library can save marketers up to 20 hours each month thanks to our tactics, content prompts and self-paced labs about the hottest marketing skillsets (you can check it out here if it sounds like something for you).

Discount Hacks for Pricing Psychology

In episode 136, we broke down two of our favourite hacks for discounts and “free” value.

• For example, if a product is priced above £100, use an ‘amount off’ discount (e.g. £20 off). If it’s priced below £100 use a ‘percentage off’ (e.g. 20% off). People will be more likely to buy.
• When offering “free value” change your wording. Using “£0” or “at no cost” reminds people they are not losing money, rather than gaining something “free”. So zero is better than free as it increases conversions.

The Decoy Effect

This is a great option for anyone offering services with different support levels or tiers.

Introduce a third option that is slightly inferior but cheaper than the main product, making it more attractive to buy.

So when you see a main product priced at £300, and an inferior but cheaper product at £180, you might be more likely to buy the main product because it seems like a better value proposition.

It’s like giving you the illusion of choice, even though they already know which product they want you to buy. Clever, huh?

Tapping into pricing psychology the right way

Don’t go overboard with discounts or bundle offers – otherwise, your products may end up getting devalued in customers’ eyes. However, there’s no need to shy away from higher prices – if you provide a top-notch experience, people will be willing to pay more.

Just remember, when it comes to pricing, value is key – so adjust your prices accordingly and reap the rewards!

When it comes to pricing psychology, there are plenty of techniques and hacks that you can use.

From anchoring effects to odd-number pricing, price bundling, perceived value and discounting – now you know the secrets behind why certain products seem more attractive than others!

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