The Psychology of
Pricing
Which digits? How high? Should it be rounded? A checklist of pricing tactics.
Theory
Prices are Compared to Other Numbers
You evaluate prices by comparing them to other numbers (e.g., past prices, competitors, adjacent numbers).
Visuals
Show Prices in Small Fonts
Customers equate visual size with numerical size.
Position Prices Near the Top or Left
Prices seem cheaper in different locations, particularly toward the top and left.
Remove Commas From Prices
$1500 seems cheaper than $1,500
Place “Small” Words Near the Price
Insert words that depict a small size (e.g., “low,” “small,” “tiny”).
Insert Alliteration into the Price
Customers were more likely to buy two t-shirts for $25 because of the matching “t” sounds.
Show Two Multiples of the Price Nearby
Something will "feel right" about the price.
Display Red Prices to Men
Men make decisions quickly, and they assume that red prices indicate savings.
Deemphasize the Price of Emotional Products
Emotional products have strong benefits, but weak economic value. Orient customers toward the benefits instead of the price.
Remove the Currency Symbol When Possible
Removing this symbol reduces the pain of paying.
Framing
Expose People to Any High Number
Nearby numbers influence the reference price.
Place a Larger Number on the Left
Customers can subtract these numbers more easily, which makes the difference seem larger.
Show Higher Prices First
Customers choose a more expensive option when you sort prices from high to low.
Distinguish the Most Expensive Option
Customers evaluate this product first, which inflates their reference price.
Offer a Similar (Yet Expensive) Version
A similar, yet more expensive version of your product will make your existing product seem more appealing.
Mention the Daily Equivalence
Customers compare this daily value to a reference price, so it feels like a better deal.
Don't Bundle Cheap and Expensive Items
Customers focus on the average, rather than the sum.
Create a Payment Medium
You can transform the payment into a separate medium (e.g., monthly credits, gift cards).
Attribute Discounts to Emotional Products
We want to buy emotional products, but we need justification.
Charge Customers Before They Consume
Paying beforehand helps numb the pain of paying because customers can look forward to the benefits.
Describe the Costs of Your Product
Customers prefer prices that are determined by material costs, rather than supply and demand.
Encourage Customers to Budget Early
Early budgeting pushes you further away from this initial money, reducing the pain of paying from these funds.
Apply Refunds or Savings Toward Purchases
These sources bypass the pain of paying.
Numerals
Reduce the Left Digit By One
Use “charm” prices (e.g., $2.99, $49.95) to reduce the left digit as much as possible.
Choose Prices With Fewer Syllables
Subconsciously, phonetic size feels like numerical size.
Divide Price Into Smaller Units
“Partitioned prices” are usually more persuasive.
Be Precise With Large Prices
Highly precise numbers feel smaller.
Place Low Numerals After Right-Facing Digits
Right-facing digits push your attention toward adjacent digits. If these digits are low, you round down.
Tailor Prices Toward Names or Birthdays
Customers prefer prices that contain the same letters in their name or birthday.
Use Round Prices in the Right Context
Round prices (e.g., $50) are easier to process than specific prices (e.g., $49.63), so they work better in certain scenarios.
Add Slight Price Differences in Your Assortment
The choice becomes slightly easier, nudging customers to choose an option.
Raise Your Prices in Small Increments
Use frequent (yet smaller) price changes. Avoid waiting until the moment of desperation.
Downsize Features Besides Price
You can change prices without changing the numerals.
Set Prices Above Round Numbers to Boost Sales of Upgrades
It feels easier to spend money when prices surpass a round number ($51.95).
Discounts
Make Sale Prices Look Different From Original Prices
Your brain misattributes the visual difference to a numerical difference.
Add Space Between Discounted Prices
A visual gap makes the numerical gap seem larger.
Place Sale Prices Below Original Prices
Vertical numbers are easier to subtract because of the digit-by-digit comparison.
Reduce Every Digit in the Discounted Price
If your price is $465, aim for a discounted price across every digit.
Offer Discounts With Low Right Digits
The difference between $22 and $23 seems more significant than $28 and $29
Give Percentage Discounts for Prices Below $100
Below $100? Give a percentage discount (20% off). Above $100? Give an absolute discount ($20 off).
Mention the Increase From the Discounted Price
"Was 25% higher" is more persuasive than an equivalent discount of "20% off."
Provide a Reason for the Discount
Customers should believe that your discount is temporary so that this lower price doesn't become a new permanent reference price.
Offer Discounts in Round Numbers
Round numbers seem larger.
Give Two Discounts in Ascending Order
Two discounts feel better than one.
Offer Discounts Toward the End of the Month
Discounts are more effective toward the ends of months because people have depleted their monthly budgets, and they are seeking ways to save money.
Arrange Discounts in Tiered Amounts
Reaching one threshold makes it easier to enter another threshold.
End Discounts Gradually
Gradually retracting a discount boosts sales.
Don’t Discount Premium Products
Emphasize the the quality of your product instead.