Psychological Pricing Strategies – Top 10 Ways To Increase Sales

Looking for infallible pricing strategies for your products?

Whether you are launching a new product or want to shake things up for existing product ranges, the ultimate goal is to boost sales, right?

Many marketers experiment as per current trends and past experiences but they overlook a critical factor: customer buying psychology. It results in missed opportunities and low sales.

As time moves forward, customers’ needs and shopping behavior also evolve. If your products do not captivate customers, they will overlook them, regardless of how amazing your product may be.

Research shows that over 59% of previous customers have high expectations from the brands, even if they bought the product a year ago. Also, about 75% of customers expect a consistent experience from every channel they engage with.

Thus, focus your energy on understanding the ever-changing buying behavior of your target customers. With this insight, you can craft compelling pricing strategies and offer valuable products that truly resonate with customers’ interests.

This article will help you achieve both the pricing strategy and a valuable product mix-up.

The Science Behind Psychological Pricing Strategies

Pricing is the core element of all businesses. There are numerous techniques to set product prices and each yields different results. At times, even the same strategy applied multiple times gives different results.

That’s why deciding product prices always gives tough times to the people involved in making the decision. So to make things simpler, here are two crucial points that need to be considered:

• The final selling price should be inclusive of all total costs (expenses, distribution, development, etc.) + total profit.
• Track results, revise prices, try alternatives, and see what works better.

Here, we have compiled a list of the top 10 pricing strategies in marketing that are used by ace businesses—be it eCommerce, brick-and-mortar stores, or subscriptions.ons.

1. Build Your Brand Loyalty

When you enter the competitive market, you will have enough players. Your focus must be to attract more and more customers and build loyalty.

Offer your product at the minimum price. You can even offer a free trial for a fixed period. Put extra effort into your content and social media marketing.

Research shows that over 87% of marketers witnessed increased sales from video marketing released on various social channels.

Once the customer base is built up, you can slowly increase your price without compromising on the quality. Get testimonials, set some offers, and see your sales soaring. This will book for yourself a comfortable seat in the market.

2. Play With Economics- The Demand Rule

Many of you might hate economics but this old-school technique is a boom. Just recall the demand rule: The higher the price, the lower the quantity demanded.

If the product is popular and the demand is high, a slight increment in price would not deter people. Further, if demand increases and supply remains the same, the prices will go up.

3. Experiment With Sizes

This is a very smart pricing technique employed by retail stores/chains. The same can be applied to online stores.

Take a real-life example. I was at a food outlet and asked for a pack of french fries. The salesperson asked me whether I would prefer a big pack, as I hadn’t asked for a small pack.

So if you aren’t aware, you end up purchasing the bigger one. This is indeed a smart move. Large things are always appealing. The more people buy it, the more money you make.

For example, Starbucks offers different cup sizes (small, medium, and large) and persuades people to buy the large one. They have set the prices in such a way that the larger one seems to be the most profitable.

4. Pull Money by Pushing Features

Subscription businesses seem to be masters at this one. One of the best and most common pricing strategies you would come across.

They set up three to five plans at various pricing levels in ascending order, with the top plan most costly with all features and the other plans with fewer features. What makes this interesting is the list of features. The hot favorite features will always be present in the top plans.

This makes people in need of that feature either buy or upgrade to the top plans. The more people switch to the top plans, the more sales and revenue you get.

5. Sell on the Name

This psychological pricing strategy depends on the product/service you sell.

Take an example. If you are selling beers in two variants—regular and premium—you will notice that people are happily purchasing the premium one at a higher price than the regular one at a lower price. That too, with a considerable difference. Maybe a 5:1 ratio of premium to regular.

In short, the word premium makes it sound like an exclusive product.

6. Battle It Out With Competitors

Once you have a loyal customer base, good reviews, and a reputed brand name in the market, it’s time to go one step further while pricing your products.

You have two options to set the product price:

• Equal to the competitor
• More than the competitor

The second option seems risky but if you guarantee A1 quality products and top-notch service to customers, selecting the second option can be an optimal choice. You can also entice your customers with additional functionalities or free products.

7. Set Prices Ending In 0,5 or 9

Have you ever seen a product price ending in 2, 4, or 8? I haven’t seen any. It’s always a round figure or ending in 9. Like $999, $49, etc. Though $1000 and $999 have a difference of 1 dollar only, a smaller number always appeals more.

Further, you can use the left-digit bias in your pricing strategy. For example, if the price of your product is $3, set the price at $2.99. Though they are almost the same, the left digit gives people the illusion of a low price.

8. Pitch at Your Desired Price

It’s a very simple and efficient pricing strategy. If you want to sell a product costing $19 at a price of, let’s say $39, many people may not purchase it. Just set a bigger price, say $59, cancel it out, and put it up for $39 only. This is the before-now technique. It surely converts customers because they view it as a huge discount offer.

9. Use Quantity as Bait

If people are buying more, offer them more discounts, free or complementary products. Buy 3 and get 2 free or Buy 3 or more and get a whopping 40% discount. Quantity discounts are widely used in supermarkets to attract audiences and clear stock, resulting in extra sales.

10. Make People’s Perception Your Power

A small description of the product is what you need to sell at a higher price, like a reputed source- (country, manufacturer, etc.)

Ex. A burger from McDonald’s or a perfume from Paris. People always have the perception that a big brand or famous source always provides better quality. That’s all you need to mention.

It’s sufficient to say that these psychological pricing strategies can help boost overall sales.

But wait a minute! It’s not the end. There is more to it.

In this digital age, advanced technologies have streamlined numerous tasks. When it comes to setting pricing strategies, you can use an effective analytics tool. So, you can evaluate the customer interaction with your products on different platforms and make an informed decision.

Bonus: Tool that helps you find your pricing sweet spot – Putler

The pricing strategies mentioned above are great but they are time-consuming. You need to do thorough research, analyze competitors, and then make a decision based on your gut.

Now, what if you had a data-driven tool that looks at your past data? What if it studies your customer base and then provides you insights into what price range they fall into?

Or, we can say, what’s the pricing sweet spot for your customers?

It would be perfect. Right? Introducing Putler.

Once you connect your store/shop and payment gateway to Putler, it will immediately process all the data and create comprehensive reports. It will divide your customers based on various spending amount ranges and other factors.

You can then look at the amount range that has the majority of your customers. It is this pricing range that your customers are most comfortable paying.

Knowing this information, you can implement a couple of things:

• Launch new products in this price range.
• Identify products that don’t sell well and re-price them to fall in this range.
• While running discounts, make sure that items that are originally higher priced fall in this range after the discount is applied.
• After knowing the location of your high-spending customers, target the customers with the enticing offers.

So..What’s your pick?

These psychological pricing strategies are just a piece of a huge pie. There are a lot more pricing techniques applied by businesses all over the world. Some of the innovative and proven ones have been covered above.

If you have more pricing strategies, feel free to post them in the comment section below.