Psychological Pricing: What Your Prices Really Say to Customers

Psychological pricing plays on the fact that consumers rarely know what something should cost. Most often the way we’re able to determine if something is a good deal is by getting it for a lower price than normally listed or by comparing it to similar products in the same category. 

Consumers want to know that they’re getting the best of something, whether it’s the best price point, the best quality, or the best value.

• Charm pricing and odd-even pricing: It removes one cent from the rounded dollar price of an item to trick the brain into thinking it costs less.
• Slashing the MSRP: Some businesses sell right at the manufacturer’s suggested retail price, but others show it next to the lower price they’re selling the item for.
• Artificial time constraintsto create a sense of urgency: Only a few hours left!
• Innumeracy: A box of pasta might be on sale for 50% off if you buy 2.
• Price appearance: $12 feels cheaper than $12.00 because the number itself isn’t as long.
• Consumers like flat rates, even when they cost more.

Higher prices give the impression that an item is worth more, even if it’s made by the same manufacturer or the same materials.

This is a popular strategy that businesses use to signal that their items are luxury or designer pieces. Customers see an expensive price tag and assume the items are of the highest quality possible. Even if that is true, it doesn’t mean that the cost reflects what the items are actually worth.