Price Psychology: The secrets to not being fooled by price!

Price Psychology: The secrets to not being fooled by price!

Price
is one of the most important elements taken into account when it comes to selling a product. The so-called "psychological price" is a marketing strategy that is rooted in the concept that some prices have a greater psychological impact on the buyer than others. In these terms when a trader decides to apply a psychological price to a product he will notice an increase in sales.
Below I have listed five strategies concerning the concept of psychological pricing that many entrepreneurs refer to when they have to decide what price to assign to the goods they want to sell:



1. Prices ending with 9

The probably best known price strategy is to use a non-round figure as the price of a product. This type of strategy involves the price ending with "9" or "99". In fact our brain tends to perceive this price as significantly lower than it really is. Prices such as 1.99 are more attractive because our mind perceives 1 instead of 2. In these terms, we will seem to save money and therefore we will be more inclined to conclude the purchase.



2. Prestige price

The so-called prestige price is exactly the opposite of the strategy described above. It consists of using prices ending in round figures, such as 99.99 is converted to 100.
According to a study conducted in 2015, round figures such as 100 are more easily processed by our brain and contribute to customer confidence building. On the other hand, the 99.99 round figures are processed more slowly and encourage a feeling of recognition on the part of the customer. In other words, the purchase is driven by feelings when it comes to round figures because price recognition is processed faster.



3. Get 2 pay 1

With this strategy, the customer will pay full price for a product and get a second one for free. This kind of strategy works a lot because for the price of one we get two identical products and the customer struggles to give up something when he can get it for free.
Since this kind of strategy has been used a lot, people tend not to pay as much attention to it lately as they used to. For this reason, many retailers try to achieve the same results by applying one of the following, for example:

Buy one and get the second one with a 25% discount.
Buy one and get a voucher worth 60 euros, free of charge.
Get 3 for the price of 1.

In fact, this kind of strategy works precisely because there are no limits and it is very versatile.


4. Expensive prices next to standard prices

This type of comparative strategy can be seen as the most effective on the market. The aim is to combine similar products but with very different prices. It's a type of strategy that works well in the fashion field because it flanks products with a similar quality but with completely different prices. In most cases the most expensive product will be the one preferred because we generally associate "expensive" with high quality.



5. The price difference is highlighted

When offering a product where both the old and the new (discounted) price are present, the sale of such a product will be easier because the customer will feel like he is getting a good deal. In these terms they will not be interested in looking for more products with better prices.
The winning card in the use of these types of strategies lies in knowing how to play with psychology and therefore "deceive" the human mind. In this regard it is useful, for example, to change the font, size or color of the price proposed to customers.


A famous case: the McDonald's fries.

One of the most classic examples of using price as a tool for decision making is the McDonald's chips. You know those salty yellow things you get when you go to a fast food restaurant? That's the one. In this case the so-called "decoy effect" is used. This strategy shifts a customer's attention from quantity to price, thus affecting the final choice.
Let's suppose we have three different but perfectly comparable quantities available: 30gr, 60gr and 90gr. They are all on a linear scale in which we find the "small", the "medium" and the
"large" version and the relative prices are obvious: 1€ for the "small", 2€ for the "medium" and 3€ for the "large".
What will the average customer do? They will buy the version that suits them best, with a slight inclination towards the "medium" size. This is because "the average is preferred to the extremes". How to influence the decision making process? Obviously by changing prices, especially the mid-range one.
Let's assume we have three different but perfectly comparable quantities: 30gr, 60gr and 90gr. They are all on a linear scale in which we find the "small", the "medium" and the "large" version and the relative prices are obvious: 1€ for the "small", 2€ for the "medium" and 3€ for the "large".
What will the average customer do? They will buy the version that suits them best, with a slight inclination towards the "medium" size. This is because "the average is preferred to the extremes". How to influence the decision making process? Obviously by changing prices, especially the mid-range one.
So let's suppose to increase the price of the "average" quantity from 2€ to 2,50€. What happens in the customer's mind? The customer notices that the difference between the "average" and the "big" version is only 50 cents and since the quantity is higher he will consider it cheaper to buy the "big"one.


In the light of the above, a question that is very dear to me arises: is it possible to consider the psychological price strategy "ethical"? The question may seem easily taken for granted since for "ethics" in marketing means not to vary significantly the interests of a client. In simple terms we are talking about not using tools that make a person perform an action that they would not have wanted to perform. The answer would then be only one. No. Actually, the thing is quite complex: not all pricing strategies are unethical.
The case of McDonald's potatoes can be considered unethical because you are driven to buy a larger product when you would actually be interested in buying a smaller version. The case of the final figure studied, on the other hand, does not affect an individual's choices but varies their evaluation capacity. If I went out to buy an apple I don't care if it costs €1.00 or €0.99, I would have bought it anyway. What changes is the choice between the various alternatives.




Have you and your language exchange friends ever heard of these psychological strategies to push the customer to buy certain products? Let us know in the comments!

Written by: Martina Sassi, Staff Writer

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