By understanding the psychology of your consumers, their thought patterns and behavior, you can actually influence their purchasing decisions. In this week’s article, I will illustrate the first 2 out of 4 pricing strategies that you could use to increase sales and profit margins today.
Psychology Pricing Strategy #1: Use Price Comparisons to Your Advantage
Let’s pretend that it is a beautiful Saturday morning and you and your best friend decide to go for brunch at a new restaurant. After being seated and given your menu, your friend suddenly grabs you, points to a spot on a menu and asks, “Wow, would you like to try a $250 10-pound caviar omelet?”
You are intrigued because you don’t see a $250 omelet on a menu too often. You then notice that just a few lines underneath the $250 caviar omelet there is a 1-pound caviar omelet for $25. Now doesn’t that sound appealing?
The restaurant did not place these items close together by accident- this is pricing strategy to influence your purchasing decision. Prices are normally subjective, but when you put them into a context for your consumers to compare, they will perceive a “deal” from the choices. Not many will buy the $250 omelet, but quite a few people will go for the $25 one.
Psychology Pricing Strategy #2: Harness the Power of Number 9 and the Absent Dollar Sign ($)
When you are thinking of setting a price at $10.00, studies show that it is best to set it at $9.99. Ending a price with the number 9 is effective because of how we are wired. We typically notice things on the left side more often, and even though the actual price is just 1 penny off, in our heads, there is a greater difference between 9 and 10.
On another note, studies show that the dollar sign typically triggers a “pain of paying” response. Omitting the dollar sign in front of a price results in an increase in consumer spending because of the favorable emotional response.
The next time you think of pricing, consider the strategies above. Let me know if you have ever used these strategies and whether it was effective. Stay tuned next week for more pricing strategies!