Pricing Tactics

Why? Because psychology works.

World Class Business

June 30, 2020

“Price is what you pay, value is what you get”

Warren Buffet, Investor

The point is, as the business owner, hunt for value at every point in the value chain so that you can maximize your profits while delivering products/services at great value to your customers.

There is a famous case study by The Economist on pricing for its subscription, either online, print, or both.

First scenario:

  1. A web-only subscription for $59                    16% response
  2. A print-only subscription for $125                 0% response
  3. A web + print subscription for $125              84% response

Second scenario

  1. A web-only subscription for $59                    68% response
  2. A web + print subscription for $125              32% response


In the first scenario, the second option was useless, but it created value seekers, not bargain hunters, a key difference. This is also known as decoy pricing, where you place a decoy, an illogical or unrealistic price, which is certain to skew your prospect’s decision. This is just one example of pricing tactics that you can use to sway perceptions in your prospects’ minds that your prices are value for money. Being cheapest is not necessarily the best pricing positioning. The Economist wanted subscribers to take its web-only option for $59 and achieved this through decoy pricing.


Some other simple pricing tricks will almost certainly change perceptions for your prices.


Reduce the left digit by 1.


$20 becomes $19.99 to increase your conversion rate by more than double. Known as charm pricing, it is most effective when the left digit changes. For example, $3,80 and $3,79 has the same price difference, but won’t matter as much compared to $4,00 and $3,99. It just works, so do it.


Fewer syllables. Consider the auditory version of your price. The more syllables, the higher the price appears to be. The brain encodes the auditory version subconsciously so that $27,82 (seven syllables) seems more expensive than $28,16 which is five syllables.


Remove the comma. By removing the comma, you reduce the length and the perception of being more expensive. So, $1499 feels better than $1,499 and your price perception has been changed, subtly yes, but definitely changed.


Offer payment instalments to “reduce” the perceived price to a more digestible price. So, while the price of $499 may seem high, five instalments of $99 does not seem quite as high.


Mention the daily equivalent if you are charging a monthly price. Framing influences the perception of a lower price overall. Instead of $14,99 per month the “only $0,49 per day” sounds a lot more palatable.


Stating precise large numbers instead of rounding them down or up (even worse!), can result in far higher conversion rates. Property buyers will pay more for the same property if it is stated as $362,798,15 instead of $360,000 and will have a higher conversion rate. It just seems more authentic, doesn’t it?


The psychology works, so make it work for you.





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