As adapted from Your Dictionary. “Psychology deals with emotional and mental processes. It encompasses many personal traits. Above all, these include how people think, feel, or behave.” Today, we examine one marketing aspect of psychology — psychology and pricing.
Firstly, take a look at these other posts related to psychology:
- Sensitive Topic – Raising Prices
- Psychology and Digital Marketing
- Shopper Online-Offline Psychology
- Consumer Promotions and Engagement Tips
- FORTY Facts on the Psychology of Color
Background on Psychology and Pricing
As Evans and Berman describe in Marketing in the 21st Century, 12e, there are many ways to look at pricing. For example:
- A price represents the value of a good or service for both the seller and the buyer.
- A subjective price relates to a consumer’s perception of the price of a product as being high, fair, or low.
- Prestige pricing assumes consumers will not buy products at prices they consider too low.
- A price ceiling represents the maximum customers will pay for a given product. In contrast, a floor represents the lowest acceptable price a firm can charge and attain its profit goal.
- Price elasticity of demand Indicates the sensitivity of buyers to price changes in terms of the quantities they will purchase.
- According to the price-quality association, some consumers may believe high prices represent high quality and low prices represent low quality.
- With multiple-unit pricing, a firm offers discounts to encourage shoppers to buy in quantity.
Infographic Tips on Psychology and Pricing
Due to the importance of psychological pricing, marketers have an array of tools to apply. So, how many of the tactics in the infographic below do you follow?
“Have you ever wondered why Apple chose to price songs in iTunes at .99 cents? Why all the food prices at football stadiums are listed from highest to lowest? Likewise, why Tiffany shows images of jewelry before showing the price? The answer: price psychology.”
“Through psychological pricing, firms drive sales by tapping into the way the human brain works. That includes how we perceive quality, value, and cost. Thus, products using psychological pricing are designed to be more appealing to consumers.”
When used well, psychological pricing lets firms boost conversion rates, drive sales, and increase revenue. To help get you started, we’ve compiled this infographic to effectively price your products.”