What is the best strategy of ‘Psychological Pricing’ that motivates customers to buy?
To help you best motivate your customers with ‘Psychological Pricing’, we asked marketing professionals and business leaders this question for their best insights. From knowing your customers’ spending limits to creating urgency, there are several ‘Psychological Pricing’ strategies that you may adopt in enticing customers to patronize your products and services more.
Here are six strategies of ‘Psychological Pricing’ that motivate customers to buy:
1. Know Your Customers’ Spending Limits
Strategy around pricing starts with what your customer base is willing to pay for products and services. Whether you bundle, discount, sales like Black Friday or promote, there is always a spend threshold that your customer base will have. The price point will dictate if they will pull the trigger and buy or if they will walk away.
Depending on your market and customer base these prices can be wildly different in range. This is why knowing your customer spend limitations is key for a successful buy strategy. After this, you can easily spark consumer interest with a pricing deal right below that threshold. The goal here is to build value in the buy and if your customers actively want your products or services showing a price below what will trigger their buy is a perfect setup.
Mark Smith, University of Advancing Technology
2. Include Free Gifts With Your Best Deals
One of the best strategies for psychological pricing is innumeracy. Customers want the best deal and want it in plain English, not numbers. For example, instead of saying 50% off when you buy two, instead say buy one get one free to boost sales. Simply including the word free is more attractive to customers because it does not involve numbers.
Gigi Ji, KOKOLU
3. Display Comparative Pricing
The best strategy for psychological pricing is displaying comparative pricing. It involves displaying the price of a product alongside a competitor’s price. It’s because customers are more likely to buy from a company offering lower prices than other options. This means that the company shows you what the item would cost if you bought it elsewhere and then shows you how much less you can pay for it if you buy it from them. This strategy works because it makes consumers feel like they’re getting a bargain by buying from you instead of another one that’s selling the same thing at a higher price point.
Shaun Connell, Connell Media
4. Use The 9-Ending and Anchoring Pricing Strategies
When it comes to pricing, there is no one-size-fits-all approach that will work for every business. However, psychological pricing can be an effective way to motivate customers to buy. By understanding how people respond to different pricing strategies, you can design a pricing structure that encourages them to make a purchase.
The first one is known as the “9-ending.” This involves ending prices with a 9, such as $19.99 or $99.99. Studies have shown that this type of pricing can subconsciously encourage people to perceive a product as being more affordable than it actually is.
Another one is known as “anchoring.” This involves presenting customers with a high price first and then offering a discount on that price. For example, if the price is $100, you can offer a 10% discount, making the final price $90. The initial price serves as an “anchor,” against which the discounted price is compared. The discount seems more significant, and the customer is more likely to make a purchase.
Sher Jan, US Installment Loans
5. Employ The Decoy Effect
The decoy effect is the best strategy of ‘Psychological Pricing’ that motivates customers to buy. The decoy effect is a pricing strategy where one pricing option is too high, another too low, and an average option in the middle. The idea behind this strategy is to encourage people to buy the middle option as opposed to both extremes. This is because people tend to see the middle option as a great deal compared to both extremes.
In many cases, companies that use this tactic will also have an additional, high-end option priced so high that it’s almost impossible for most customers to buy it. This can be seen as a way of encouraging customers toward the more affordable options by making them feel like they’re getting something even better compared to the other available options.
Yoav Morder, Sonary
6. Create Urgency
The best psychological pricing strategy is to create urgency. People don’t like missing out or regretting. Creating a situation where they feel like they might miss out on some special deal or discount forces people to make impulsive buying decisions. Placing a sign that indicates a commodity will be sold for 10% discount of its original price for just one day will cause sales to increase sporadically. People instinctively follow others as well. Seeing everyone else pick the commodity off the counter creates a sense of urgency and compels one to do so too so they don’t miss out, especially if it was something they were initially thinking of buying.
Sophia Dawodu, Local Electrician
“Psychological pricing” is a marketing technique that plays on the psychological quirks of human behavior to influence customers’ buying decisions. While it can be an effective way to increase sales, it’s important to use it ethically and responsibly. Psychological pricing can be a powerful tool to increase sales and encourage customers to buy.
If you’re not using it already, we hope these six strategies will give you some ideas on how you can start using psychological pricing in your business. Remember, the goal is to make your prices more appealing to customers so they’re more likely to buy from you — so experiment and find what works best for your business.