The Psychology of Pricing

Does it really make a difference to sales if you price something at $9.99 rather than $10?

Certain prices have a psychological impact – for example, most pricing is set at $9.99 rather than $10, or $997 rather than $1000. This is now common practice and attracts interest from buyers which wouldn’t exist if the ‘higher’ price was quoted. But there’s more to it than that.

You may think its mumbo jumbo, but there seems to be an attraction or repellence factor around certain numbers. We don’t know why but as this is the case, why not take advantage of it in your pricing?

In Marlene Jensen’s ‘Pricing Psychology Report’ (http://www.pricingpsychology.com/) she speaks of “magic” numbers and “poison” numbers.

Examples of “magic” numbers:

• A price with a 7 in it, considered to be a “lucky number”, has been proven by all sorts of trials to bring in more sales. Jensen says as much as 10%. For example $97 outsells $99.
• But if you are selling to markets in the East as in China and Japan, 8 at the end of a price is considered lucky as the Chinese character for 8 is the symbol for ‘infinite good fortune’. But only an 8 at the end of the price will work –choose $78 and not $80 
• When you put up your price notice, don’t include the cents if the price is in round numbers. If you sell something for $37, don’t list it at $37.00 as that looks bigger to our eyes and we think it’s more expensive. On the other hand if you are discounting by $37, then write ‘$37.00′ up big and bold as customers will think they are getting a better bargain!

Examples of “poison” numbers:

• A price containing a number 3 is said to be a turn off to customers. Jensen gives this astonishing example of price testing she’s conducted:
  Prices tested: $295, $395, $495
  Results:
  - 73 orders @ $295
  - 26 orders @ $395
  - 51 orders @ $495
• The number 13 is generally seen as an ‘unlucky’ number in the West though price testing hasn’t been done to prove this.

Make some tests of your own to convince yourself that this is true.