Psychological Pricing

                       
Psychological pricing is a pricing strategy that utilizes specific techniques to form a psychological or subconscious impact on consumers.

Psychological Pricing Examples

    Pricing at $1.99 instead of $2
    Price bundling for percieved savings

Deeper Insights

Psychological pricing integrates sales tactics with price. Let’s say we’re pricing a candy bar. Utilizing a value based pricing strategy, we’ve determined that chocolate should be priced between $1.85 and $2.15. If we were to utilize psychological pricing on this item, we would be more likely to price the candy bar at $1.99 than $2.00 because of the subconscious “99 effect”, which takes advantage of the fact that our customers read from left to right and see the number 1 first, therefore subconsciously believing they’ve received a deal.

The same methods can be used to create the opposite effect and make someone feel as if they are investing in a luxury or quality item. Artificially inflating the margins on luxury goods could potentially associate a social status with them.  

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