CIU 111 (Week 2) - How does Pricing Psychology Work?

We all can't pass up a good offer, which is what sellers know, and are hoping the voice in our heads are telling us, or is that just me.

To assist the seller there are 4 simple strategies to sell a product using pricing psychology.

They are:

Prestige Pricing

Charm Pricing

BOGOF Pricing

Comparative Pricing

Prestige pricing is the method where you turn all odd numbers into more rounded numbers, for example people would buy an item which is $40 instead of $39.72 or $40.45, this is purely because solid rounded numbers 'feel right' and its easier.

Next we see Charm pricing. Its seen everywhere I can't guarantee you there are some charm priced items in your local shop. Charm pricing is when a product is priced at $19.99 or $3.99, this works because when your brain sees $44.99 next to something that $50 you will favour the item which has the lesser value even if its only 1c.

BOGOF, which means Buy One Get One Free, is the age old method of purchasing one, will get you another, the psychological strategy used here is purely greed, once a customer sees the offers, logic gets thrown out the window and the main focus is getting the free item.

Finally we see Comparative pricing, Comparative pricing is seen to be the most effective method, this is purely where we see two products *both priced the same originally, but one has been priced higher, so the brain tells us to go for the cheaper one, which is actually the more expensive one. A relative study is the case study on The Williams-Sonoma bread*. maker

*https://blogs.wsj.com/accelerators/2013/04/10/paul-lee-the-williams-sonoma-bread-maker-a-case-study/

References

https://www.nickkolenda.com/psychological-pricing-strategies/

http://www.varstreetinc.com/blog/What-is-Psychological-Pricing-Definition-Strategies-Example/