Psychological pricing is a business concept supported by the idea that customers respond better to certain types of prices and will more likely to buy items with these prices. But there's so much more to it than simply being the cheapest around. It is common for retailers to end prices with an odd number, for example $6.99 or $3.95 rather than $7 or $4. Psychological pricing is a universal technique that you can apply to virtually any other broad pricing strategy. As we saw, whole numbers can communicate quality. Pricing to promote a product is a very common application. Apart from these key examples, we see penetration pricing strategies deployed across a range of industries including hotels and airlines and consumer product goods. For example, setting the price of a watch at $199 is proven to attract more consumers than setting it at $200, even though the actual difference here is quite small. Psychological pricing centers on the use of a simple but impacting pricing tactic that is based on natural, irrational thought processes that typical customers follow when shopping. It integrates sale ways with worth. There are many examples of promotional pricing including approaches such as BOGOF (Buy One Get One Free), money off vouchers and discounts. Deploying this pricing strategy strategically can be a sure shot way to get a loyal customer following and establish your foothold in the highly competitive market place. psychological pricing an approach to PRICING which pays particular attention to the effect which a product's PRICE has upon consumers' perceptions of the product. Psychological Pricing Examples Charm Pricing. In this pricing method, retail prices are often expressed as just-below numbers: numbers that are just a little less than a round number, e.g. Even though the price is only $0.01 cheaper, because it reduces the cost from 4 … It makes buying a little less painful by bundling similar items together. Examples of psychological pricing Charm pricing. Psychological pricing is a pricing tactic that takes advantage of a customer’s emotional response to certain price points in order to enhance sales prospects. (4) B. Whether it’s decision fatigue, the pain of spending money, or simply the stress of the whole purchasing process, shopping isn’t pleasurable for everyone. With the advantages of psychological pricing fully understood, here are some of the main tactics used as part of a psychological pricing strategy: Odd Pricing. Odd-even pricing is a psychological pricing tactic. You need to choose numbers that will compel your audiences to buy. Cents-Less Pricing. For example, a car might be priced at $15,999 rather than at $16,000. You often see prices ending in 5 in car or house sales. 5. If you want to easily grab your customers' attention and encourage them to buy your products or services, psychological pricing … A psychological pricing strategy works by selecting prices to which consumers will have an emotional reaction. This Psychological Pricing Strategy is called Bundle pricing. Psychological pricing uses unusual pricing conventions to make products or services look significantly cheaper than they actually are. In a pricing experiment conducted by Richard Thaler, two scenarios were tested for a relatively mundane exercise: buying a friend a beer on the beach. There are over 40 psychological pricing strategies and subsets. $19.99 or £2.98. With that in mind, it is important to test on your own website to see what’s best for you. Psychological pricing uses the customer's emotional response to encourage sales. Let’s say we’re pricing a candy bar. The Advantage of Psychological Pricing. In much of the same way as Anchoring, persuasive pricing techniques establish mental shortcuts (or: heuristics) to streamline decision-making. Odd-even pricing is a further example of psychological pricing. psychological pricing. Psychological pricing refers to techniques that marketers use to encourage customers to respond based on emotional impulses, rather than logical ones. https://uwmktg301.blogspot.com/2010/02/psychological-pricing.html - In a study conducted by Schindler & Kibarian in 1996 they tested odd pricing using three versions of a direct mail catalog for women's clothing. PSYCHOLOGICAL PRICING: Pricing designed to have a positive psychological impact. Bundle Pricing. Psychological pricing examples. Below is an example discussing the shoe brand Manolo Blahnik, which has incorporated this pricing strategy into their marketing plan. 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