11 Proven psychological pricing strategies + examples (2024)

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Christian Cabaluna

August 15, 2024

If you want to create pricing strategies that tap into customers' subconscious triggers, then this psychological pricing strategy guide is for you.

This post will teach you how to move beyond simple cost-plus pricing and use psychology to influence how customers perceive value.

By the end of this read, you will know how to subtly maneuver your customer’s decision-making to increase your sales.

Let’s get right to it.

11 Best psychological pricing strategies you must know

As you go over this list, think about what each segment of your target buyers would consider “the best” or “a good deal” at the very least. Shortlist these strategies based on your answers to apply after this read.

1. Bracketing

Bracketing positions two extremes on either end and a desirable pricing option in the middle.

For example, you offer a basic subscription for $5 with super limited features, a premium subscription for $50 for extra perks, and a mid-tier option for $20 with all the basic features needed, making the mid-tier option appear as the best value.

The idea here is to direct your buyer to the price point you want them to take by making them feel it's the best deal they can get.

2. The center stage strategy

The Center Stage Strategy also places the most desirable option in the middle, like bracketing, but instead of using extreme prices to make it stand out, it relies on positioning and visual appeal.

For example, you place a $20 meal between a $10 and a $40 food item on a menu. The $20 option seems like the best choice because it’s front and center, naturally drawing attention.

Most retailers love this strategy because we’re wired to focus on the middle first, and our eyes are naturally drawn there.

To make this work even better, make sure that the middle option is visually attractive, grabbing your buyer’s attention right away.

3. The decoy effect

The Decoy Effect uses two less appealing price options to make a third, more desirable option stand out.

For example, you price a medium-sized coffee at $6 and a large one at $6.50. The small coffee is $3.50. Even though the medium coffee seems reasonable, it’s actually a decoy because the large coffee only costs a little bit more, making it look like the best deal.

Unlike Bracketing and The Center Stage Strategy, which use extremes and visual placement to guide buyers, the Decoy Effect taps into your buyer’s sense of value. When customers see that the large coffee doesn’t cost much more than the medium, they are likely to choose the large coffee because it feels like they’re getting more for their money.

In this example, the small and medium options are there to make the large option look like a steal, nudging customers to go for the bigger, better value.

4. The flat-rate bias

This pricing strategy is all about making a single, all-inclusive price more appealing than paying separately for each item or service.

For example, consider a streaming service that offers a monthly subscription for $10, which gives you unlimited access to all movies and shows. Even if you only plan to watch a few movies, the flat rate feels like a better deal than renting each movie individually for $3.

People are naturally drawn to how simple and predictable a flat rate is because it saves them the hassle of calculating and worrying about extra costs. It’s that comfort of knowing exactly what you’ll pay, with no surprises, that makes this strategy so effective.

In short, the Flat-Rate Bias offers a straightforward price that seems more convenient and cost-effective than dealing with multiple smaller payments.

5. Price appearance

This psychological pricing strategy is all about how a price looks and influences how expensive or affordable it feels.

For example, pricing something at $9.99 instead of $10.00 might seem like a tiny difference, but $9.99 feels cheaper because our brains see the first number and register it as a lower price.

This strategy plays on the psychology of numbers—people tend to focus on the first digit and subconsciously perceive $9.99 as a better deal than $10, even though the difference is just a penny.

Price Appearance uses small tweaks in how a price is presented to make it seem more attractive and affordable to buyers to nudge a purchase.

6. Innumeracy

This takes advantage of the fact that many people struggle with numbers and percentages, making it easier to sway their buying decisions with cleverly presented deals.

For example, offering “Buy One, Get One Free” instead of saying “50% off 2 items” feels like a better deal, even though they’re essentially the same. The idea of getting something for free is more appealing and easier to understand than calculating a percentage discount.

This strategy works because people often have a hard time accurately assessing numerical value, so Innumeracy uses this to create offers that seem more attractive, even if the actual savings are the same. It's about making the deal feel more exciting and straightforward.

7. Artificial time constraints

This creates a sense of urgency by giving customers a limited-time deal.

For example, an online store might advertise a “24-hour flash sale” with big discounts, prompting customers to buy quickly before the offer ends. Even if the sale repeats often, the time limit makes people feel like they’ll miss out if they don’t act fast.

This strategy works because it taps into the fear of missing out (FOMO). It pushes buyers to make quick decisions, driving more immediate purchases because the deal seems scarce and time-sensitive.

8. Slash the MSRP

This involves showing a discounted price next to the original Manufacturer's Suggested Retail Price (MSRP) to make the deal look more appealing.

For example, if an item’s MSRP is $142.12 and you sell it for $63.95, customers feel like they are getting a great deal.

This strategy works because people love to see that they’re saving money, especially when the original price is clearly marked. Slash The MSRP pricing strategy uses the contrast between the original and discounted prices to create a sense of value, encouraging buyers to take advantage of the perceived bargain.

But be mindful about how you apply and play with this strategy. Don’t overdo it or reprice it lower than it should because it can quickly backfire unless you sell dropshipping products with high-profit margins.

9. Odd/even pricing

Odd/Even Pricing is a strategy where prices ending in odd numbers, like $9.99, are used to make products feel cheaper, while prices ending in even numbers, like $50.00, are used to convey quality and luxury.

Here’s my favorite example from this supplement eCommerce store: they priced their glutamine supplement at $44.95 instead of $50.00 to make it seem more affordable.

Our brains perceive odd numbers as smaller and more of a bargain, while even numbers are often associated with higher-end products. Odd/Even Pricing cleverly uses this psychological effect to influence how customers see the item’s value and quality.

10. Charm pricing

This technique prices items just below a round number to make them look cheaper, like pricing something at $9.99 instead of $10.00.

For example, a product priced at $49.99 feels more affordable than one priced at $50.00, even though the difference is just a penny. People tend to focus on the first digit and subconsciously round down, making the price seem lower than it actually is.

11. Price anchoring

Price Anchoring is a strategy where you show a higher price first to make the next price seem like a better deal in comparison.

For example, you display a luxury watch priced at $1,000 next to a similar watch priced at $500. The $1,000 watch serves as the "anchor," making the $500 option feel like a bargain, even if $500 is still a significant amount.

Unlike Bracketing, which positions two extremes around a desirable middle option, or the Center Stage Strategy, which makes the middle option more appealing with its placement, Price Anchoring focuses on setting a high initial price to influence how customers perceive subsequent prices. It sets a mental benchmark, making the lower price seem more attractive.

The pros & cons of psychological pricing

While psychological pricing is generally effective, it’s not every business’s cup of tea. As you review these pros and cons, consider whether bringing psychological pricing to the mix will be worthwhile.

Pros

1. It increases the perceived value of products or services

Pricing an item at $99.99 instead of $100 makes it feel like a better deal, even though the difference is just a penny. This small change can make customers feel like they’re getting more value for their money, ultimately generating more sales.

2. Encourages impulse buying by making prices appear more attractive

Pricing a product at $19.99 instead of $20 makes it feel cheaper, which can trigger a spontaneous purchase. When prices look like a bargain, customers are more likely to buy on the spot without overthinking it.

3. Appeals to customer emotions which generates higher sales

Psychological pricing taps into customers' emotions by making prices feel more appealing or exciting. For example, offering a product for $49.99 instead of $50 can create the feeling of getting a special deal, which triggers positive emotions like satisfaction or happiness. When customers feel good about a price, they’re more likely to buy.

4. Helps differentiate products in competitive markets

If most competitors are pricing their items at even numbers, like $50, price yours at $49.99 to catch the eye. This slight difference can make your product seem like a better deal or a more thoughtful choice, helping it stand out and attract more buyers.

Cons

1. Causes customer distrust if the tactics are too obvious

If customers catch on to the fact that prices are manipulated just to make them seem cheaper, they may feel tricked or deceived. For example, if a store always uses $9.99 pricing but rarely offers real discounts, customers might see this as a gimmick and lose trust in the brand.

To avoid this, use psychological pricing subtly and pair it with genuine value, like occasional real discounts or high-quality products, so customers feel they’re truly getting a good deal.

2. Reduces profit margins if not carefully managed

Consistently pricing items at $9.99 instead of $10 might make them more attractive, but that $0.01 difference can add up over time, especially with high sales volumes. To balance this, make prices appealing with a healthy profit margin to ensure the strategy doesn't undermine your overall profitability.

3. Not practical for all customer segments, especially those more price-sensitive or analytical

Psychological pricing doesn’t work as well with those who approach shopping analytically. For example, a customer who carefully compares prices or calculates the exact value might see through strategies like $9.99 pricing and opt for the cheapest option regardless.

To address this, know your audience and use psychological pricing only where it makes sense.

4. Too many pricing options can be confusing

If you offer too many different price points, it can overwhelm customers. For example, having basic, mid-tier, premium, and several decoy options all at once will make it hard for customers to decide, which causes decision fatigue when they walk away without buying anything.

To avoid this, keep pricing simple and focused, giving customers a clear path to the option you want them to choose without overwhelming them with too many choices. Whenever possible, keep the options down to 3 or 4.

5 Best practices when implementing psychological pricing

To make the most out of your psychological pricing efforts, remember these points. Jot down what is most applicable so you don’t forget it as you apply the strategies.

I. Test different pricing strategies to see which resonates most with your target audience

Start by experimenting with a few different pricing tactics, like charm pricing ($9.99 instead of $10) or offering bundle deals, to see which ones bring in more sales or positive customer feedback.

Run A/B tests—offering different prices to different groups of customers—to find out which approach works best. Test and tweak your pricing, especially during sales events or when launching new products, to make sure you're hitting the right note with your audience and maximizing your sales.

To make it easier, use Clootrack to drill down on CX data so you can analyze your customer’s behavior better.

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II. Combine psychological pricing with genuine value to keep customer trust

Always offer real value to your customers. For example, if you use charm pricing to make a product seem cheaper, pair it with high-quality features or added benefits that make the purchase worthwhile.

This way, customers feel like they’re getting a good deal, not just being tricked by clever pricing. You build trust and increase customer loyalty by consistently providing value alongside these pricing strategies.

III. Keep your pricing structure simple to avoid overwhelming customers

When setting prices, be clear and simple. For example, offer just a few pricing options—like basic, standard, and premium—so customers can easily compare and choose without feeling confused. Avoid using too many different pricing strategies at once, as it can make decision-making harder for your customers.

IV. Regularly review and adjust prices to make sure it's profitable

Check if your pricing strategies are still effective and profitable. For example, if costs increase or market conditions change, you might need to raise prices slightly to keep your profit margins.

It also helps you stay competitive, making sure you're not underselling or overpricing compared to others in the market. Keep an eye on your pricing and make adjustments as needed to keep your business profitable and sustainable. You can hire a sales expert or work with a marketing intern (more cost-effective if you just need a temporary hire) to handle this.

V. Focus on key products or services where it will have the most impact

Apply psychological pricing to bestsellers or high-margin items. For example, if you have a popular product that drives most of your sales, use charm pricing or the decoy effect on that item to boost revenue.

Conclusion

As you explore psychological pricing strategies, remember that they are not a one-size-fits-all solution for all your funnel-related or conversion issues. Test one strategy: do A/B tests to make sure you apply the strategy with the most potential.

Psychological pricing is just one of the ‘whys’ you can answer to improve customer experience. If you want to learn more ways to improve how users perceive your brand, Clootrack can help.

Our AI-powered CX analytics solution analyzes customer conversations in real-time to pinpoint why your customer experience falls short so you know what to address.

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Author Bio

Christian Cabaluna is an SEO content writer with 5+ years of first-hand experience. When he isn't writing in his favorite coffee shop, Christian enjoys reading (especially about psychology and neuroscience), cooking, watching documentaries, camping in the mountains, and catching beautiful sunsets.