Pricing Psych: Getting Inside the Consumer’s Mind

When it comes to pricing, gaining insight into the minds of your consumers can be invaluable. Finding the balance when it comes to pricing can be the difference in the success or failure of a business. If prices are too high, it can frighten customers away. A price that is too low destroys your bottom line. What we mean by pricing psych, then, is simply being able to understand how your customer’s brain functions when it comes to pricing. There are three points to consider, in order to set the bar to the right level.

First of all, do you really want your customer comparing your prices with those of your competition? It may seem like a good idea, but research is showing otherwise. Sometimes, comparing your price to a well-known national brand simply convinces the consumer to pay a little more and buy from a name they know. Trials have proven that it is usually more effective to shelf two or more similar products of different prices next to each other and then let the customer decide. Some choose price, but a large percentage pick the brand they trust. Knowing this, allows you to mark prices up a little.

How you present the price may also be a factor in how your customer thinks. One study showed that customers at restaurants spend considerably more when prices are listed as numerals without a dollar sign, for example, 21 as opposed to $21.00. It is also interesting to know that listing prices using 99 cents can increase profits, as most people neglect to consider the numerals to the right of the decimal point.

When it comes to pricing, it can also be beneficial to give your customers some context. Displaying a product between one that is cheaper and one that is more expensive can drive sales. How? One way is that this design can often cause buyers to mentally compromise and to purchase the middle-priced product. They can pride themselves for being thrifty, without feeling like they are being cheap. It also can make the more expensive product not seem so expensive, thus driving sales of the higher priced item as well.

Pricing psych is really shorthand for taking the time to understand how your customers think about pricing. Doing it right can make everyone happy: The consumer will feel that they have shopped well, and your company will reap increased revenue.