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What is the latest on pricing psychology?

by James Liberty
14 replies
I once heard prices should end with the number 7 ($17, $27, etc). But a few years ago I heard John Reese say that it's best to end it with .95 if the item is $40 or less ($19.95, $29.95, etc). (Maybe it was $70 or less, I can't remember).

That said, what is the latest on pricing psychology? How should I price my products?
#latest #pricing #psychology
  • Profile picture of the author gjabiz
    Split test. .95 vs .97 A/B same traffic source. Then you have YOUR answer.

    gjabiz


    Originally Posted by James Liberty View Post

    I once heard prices should end with the number 7 ($17, $27, etc). But a few years ago I heard John Reese say that it's best to end it with .95 if the item is $40 or less ($19.95, $29.95, etc). (Maybe it was $70 or less, I can't remember).

    That said, what is the latest on pricing psychology? How should I price my products?
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  • Profile picture of the author Ryan W Milligan
    Split testing is the way to go for sure but I've always had the philosophy that if you've got a product that you can make people want or something that people need then price doesn't matter a great deal.

    Nobody will buy a single sheet of A4 paper for £10'000 unless they absolutely had to. Supply and demand, you just have to make sure what you are supplying is something that they can't get elsewhere.
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  • Profile picture of the author mirko76
    I read this article some time ago and found it very interesting:

    Psychological Pricing: 29 Strategies and Tactics

    Nick also had an AmA on the fastlane forum. Btw., I feel your thread may be in the wrong section.
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  • Profile picture of the author ryanmilligan
    Banned
    To be straight with you there is absolutely no way someone can you you any kind of definitive answer to this.

    Product (A) could sell best ast $13.11

    Product (B) could sell best at $27

    Product (C) could sell best at $1100

    It's all about who the potential buyers are and how you market to them.
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  • Profile picture of the author maximus242
    You want the latest in pricing psychology? My honest answer is go to your local walmart and see how they do the prices. It changes depending upon the price point. Walmart has way more testing data than every direct marketing company combined. The do however many billions of transactions per year.
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    • Profile picture of the author ThePromotionalGuy
      You nailed it.

      Most who've never been involved with retail pricing, plan-o-grams, kiosk placement, retail psychology have no idea.

      Study the Masters of Retail. They know more about the buyer than the buyer themselves.

      Originally Posted by maximus242 View Post

      You want the latest in pricing psychology? My honest answer is go to your local walmart and see how they do the prices. It changes depending upon the price point. Walmart has way more testing data than every direct marketing company combined. The do however many billions of transactions per year.
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      • Profile picture of the author gjabiz
        Visit both, Target and Walmart. Both are huge on data mining.

        The don't just throw things in their isles willy-nilly. My opinion is, Target has the pulse of the younger buyers.

        Retail psychology seems to be an ancient art, but, still...these guys do BILLIONS. Much to learn from their plan-o-grams, end caps, eye level placement and which vendor is paying the most for shelf space.

        LOTS to learn, thanks PromotionalGuy.

        gjabiz

        PS. Avoid Sears and JC Penny they couldn't sell anything if their existence depended on it...wait, it does. Au revoir to both, and good riddance to Radio Shack too.


        Originally Posted by ThePromotionalGuy View Post

        You nailed it.

        Most who've never been involved with retail pricing, plan-o-grams, kiosk placement, retail psychology have no idea.

        Study the Masters of Retail. They know more about the buyer than the buyer themselves.
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      • Profile picture of the author Oziboomer
        Originally Posted by ThePromotionalGuy View Post

        You nailed it.

        Most who've never been involved with retail pricing, plan-o-grams, kiosk placement, retail psychology have no idea.

        Study the Masters of Retail. They know more about the buyer than the buyer themselves.
        There could be a whole study published on the pricing of Nappies and Pet Food and their relationship with the overall profitability of the supermarket chain.

        Sometimes it is easier to just be a consumer than a marketer.

        Observing that consumptive compulsion at point of decision subjectively...now that's an art form.
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  • Profile picture of the author RickDuris
    A partner recently did a three-way A/B/C test between $6.95, $6.97 and $7.

    $6.95 won. But not by much.
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  • Profile picture of the author Alex Cohen
    Originally Posted by James Liberty View Post

    I once heard prices should end with the number 7 ($17, $27, etc). But a few years ago I heard John Reese say that it's best to end it with .95 if the item is $40 or less ($19.95, $29.95, etc). (Maybe it was $70 or less, I can't remember).

    That said, what is the latest on pricing psychology? How should I price my products?
    There are many products and services that can't be split-tested. Nor can a retail model be applied.

    Specifically, those that are high-ticket, low-volume.

    In those cases, concentrate on making your offer as irresistible as possible and don't worry about the last two digits of the price.

    Alex
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  • Profile picture of the author Vevek Gahatraj
    Study a little bit about something called "The Decoy Effect" which can help you in your pricing strategy for Bigger Sales.

    Good Luck
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