I find psychology fascinating and have applied many of its principles to my business marketing efforts over the years. You may already use pricing psychology to grow your business without realizing it. A lot of business owners do!
Keep in mind that not all pricing psychology options apply to every business! Carefully consider which ones might work well in your industry. As you read the examples provided, I am certain you will recall instances in which pricing psychology has affected you as a consumer. If so, then it is proof that this style of marketing works!
There are so many ways to apply the psychology of pricing. In fact, there are more than I can cover in this blog. But I am going to share a few of the most common ones.
It Just Makes Cents
One method involves changing the last digit of a price to a 9 instead of a 0. Research has shown that most consumers perceive $1.99 as significantly less than $2.00.
In other words, a consumer’s brain analyzes the 1 and equates it to $1.00. Because of this, they interpret the savings to be even greater than it is. And in some cases, sales numbers increase by merely setting the 9’s to a smaller font size!
As a rule, we as consumers are constantly looking for the best deal possible, even if it is by just a penny. Have you ever used this pricing method?
Another strategy is to do just the opposite of the previous example. It requires setting all prices to end in 00.
Consumers can more easily interpret and process the value if it ends with a 0 – even more so if it ends in 00. And psychology tells us that most consumers “feel” better about a 0 than any other number.
In this technique, simplicity rules. And it is always great when you can keep it simple, right?
One technique that I know you are familiar with is the buy “X” and get “Y” free style of marketing. The strength of this strategy is… well, greed.
The consumer wants to believe they are getting the best value for what they spend. And the appearance of getting something for nothing invokes a feeling of victory for the shopper, encouraging the purchase.
I know I am not alone when I say this one has worked on me several times! Do you get a little excited when you see the BOGO acronym (Buy One-Get One) in an advertisement?
Another concept that is used frequently in pricing psychology is time constraints. The most popular is the “1 Day Only” strategy.
Many consumers like to analyze a potential purchase. They want time to consider if it is the best value and whether they want or need the item or service. By applying a limited time to the price, consumers are more likely to react quickly.
In some cases, even if you are hesitant about the purchase, you may be convinced to make an impulse buy with this marketing technique. You do not want to miss a great deal, right?
Change It Up
One marketing strategy that many companies use frequently is a comparison technique. It involves putting two items next to each other that seem comparable but with different prices.
Much like other concepts of pricing psychology, this one triggers the idea, “Why should I get THAT when I can have THIS?” This can work two ways.
The first scenario involves making the lower-priced item extremely attractive based on the “amazing” cost by comparison. The second scenario draws attention to the higher-priced item by pointing out the benefits of it and pricing it just slightly higher than the comparable product.
As I discussed in the February blog, communicating confidently in your business is an essential facet of your overall success. And having confidence in your pricing structure is particularly important to the growth and profitability of your business. In a nutshell, know and charge your worth!
Once you have a Ladder of Services established with a solid pricing structure, you can more easily play around with a few of these marketing strategies. I would love to hear from you about any success you find by using them (or others)!
Overwhelmed trying to figure out your pricing strategy? You do not have to figure it out alone. Sign up for an introductory business strategy call, and I will help you make decisions on the next steps for you and your business.
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