What is psychological pricing success based on?

Psychological pricing strategies offer very good results when it comes to setting prices for certain products or services. With them, you can attract customers based on their perception of the prices in your catalogue and how this influences their purchase decision. It all depends on how the consumer thinks.

Thanks to multiple studies, we know that different types of prices generate different decision patterns in potential customers. For example, unrounded prices are more difficult to calculate, so if we lower a price from €9.98 to €8.97, potential customers will perceive that there’s been a discount but won’t stop to assess how much. This makes it easier for them to perceive the discount as something positive. This is how, through psychological pricing strategies, you can:

• Give eCommerce customers or users the impression that they’re paying less.
• Relate certain products or services with the concept of the offer.

The ultimate goal is to convince consumers that you have a good price to offer them, especially on goods that aren’t essential. For this, you can resort to different tactics.

• Odd-even pricing:

Varying your prices between odd and even gives consumers a different perception. Even prices are usually rounded numbers that create a sensation of completeness and comfort. It’s currently increasingly difficult to see this type of pricing due to the high amount of competition in the market.

For their part, odd prices are connected with deals, promotions, or discounted products. These are prices that usually end in .95 or .99. These are used to identify brands that can be bought by all types of users. That’s why, before launching into using them, you ought to assess the brand image that’s being built and the positioning that you want to achieve.

• Customary pricing:

For a new product or services, this is based on establishing a price that’s very similar to the price that customers are used to paying. Above all, this must be considered in highly competitive markets and those with a large elasticity of demand. In these cases, the customer expects a certain price and isn’t willing to pay more than that amount while, at the same time, a lower price will lead them to mistrust the item.

In this scenario, retailers can use automated tools to monitor the competition and their prices to be able to set a price that’s as close as possible to the needs of the market.

• Prestige pricing:

In this strategy, prices that are more expensive than the competition are chosen to send potential customers the message that your product is better, higher quality, or more exclusive. Consolidated and well-positioned brands can use this policy to set themselves apart from your competitors.

The “but” here is that the product needs to meet the expectations of the target audience. Otherwise, they’ll feel cheated and in addition to opting for other brands in the future, they can start an online reputation crisis that affects the engagement of the company’s other regular customers.

• Bundle pricing:

This is very common in eCommerce stores and marketplaces. It consists of offering various products together at a price that is lower than if each product were purchased individually. Generally, products that are similar or that are meant for the same function are grouped together. You can see this in the product recommendations from Amazon.

BOGO: Buy one, get one free

In BOGO strategies, for the purchase of a first article, the user is offered another product completely free. Even though the company is the one that selects the free product based on its objectives and stock, the customer perceives you giving them a gift. This creates a sensation of closeness to your audience that will help to build loyalty and enhance the optimisation of sales for the eCommerce business. At the same time, thanks to the call effect, the number of visits to your online store will increase significantly.

When implementing these strategies in eCommerce businesses, you can apply multiple psychological pricing tricks, such as removing decimal points and commas from complex prices or playing with the size of the prices in your catalogue. You can also increase the effectiveness of psychological pricing by generating a sense of urgency and exclusivity in potential customers. You can achieve this through flash sales, email marketing with personalised deals, or by offering a specific price to a group of users for a certain amount of time. The feeling that they might be left without that item, even if they hadn’t planned it buy it initially, will activate the emotional response that you’re looking for.