How to implement a psychological pricing strategy to increase your sales

How to implement a psychological pricing strategy to increase your sales

01/11/2021 - Pricing strategy

How prices are displayed, both in eCommerce businesses and in catalogues for retailers, greatly influences the product image being conveyed. Psychological pricing helps to boost your pricing strategy precisely by adapting it to potential customers’ expectations. How can you apply a psychological pricing strategy to sell more and better?

What is psychological pricing?

Psychological prices contain the characteristics needed to be more attractive to consumers, whether because of their format, numerology, or how discounts appear, among other factors.

Within the framework of business development, psychological pricing strategies allow us to get closer to and improve the expectations of users, using all these details to awaken certain sensations in them. This is why this type of pricing strategy plays a fundamental role in the audience’s perception of the brand.

What elements are involved in psychological pricing?

The psychology of pricing covers distinct elements when it comes to displaying the prices in your catalogue or eCommerce store. Some of these will depend on the type of sector you’re in since perceptions differ, but in general, we can talk about the following five and their varieties:

1. Design. The size and colour of the price shown can be as attractive as chilling. In an eCommerce store, avoid using bubbles and aggressively coloured framing for a more natural shopping experience. However, you should still apply different colour palettes to indicate sale prices, pack prices, etc.

2. Currency. Depending on the products, not including the currency symbol can help to reduce the importance of the expense for the user.

3. Discounts. Should you show the discount in euros or as a percentage? Well, this will depend on what’s more eye catching. For products with a low cost, such as those you can find in the supermarket, it’s more attractive to see the discount in terms of percentage, except for in very simply quantities. For products with a very high cost, knowing the exact savings has a much greater impact.

4. Digits and decimals. Here, we enter into the eternal debate between prices ending in 0.99 and rounded prices. Which sells more? In this case, the luxury sector is more affected by this choice since, in the goods that are more commonly consumed, users are already less receptive to these tiny differences in price. That being said, when it comes to the purchase of a high-end smartphone or even a car, for example, knowing the exact price, with all of its digits, generates much more confidence on the part of the potential customer.

5. The unit price. For the sale of services divisible goods, showing the price per use helps the buyer to put the expense into perspective. The price per load for detergent, for each use of a coffee maker, or even for each time you wear a garment is a technique that is gaining popularity in some eCommerce stores to raise awareness of the environmental value of purchases over the long term.

Psychological pricing strategy

3 steps to a psychological pricing strategy

If you’re already convinced of the benefits of a psychological pricing strategy, pay attention to the three steps you need to implement one:

1. Audit your catalogue. Make groups of the products that match the elements that need to be promoted, whether by category, by the necessity that they awaken in the user, or any other distinctive feature.

2. Monitor the competition. Check the prices that the competition has applied to each group of products and study their fluctuations to generate rules for changing the prices whenever necessary.

3. Carry out A/B testing. You ought to do the necessary testing to check the prices you’ve applied to each product, fine-tuning each decision according to its performance, always using strictly monitoring and measurements. You can do this using real tests on your website with groups of phantom users, for example.

How can I improve my psychological pricing strategy?

Your psychological pricing strategy should be accompanied by other techniques that allow you to optimise your results at all times. Discount optimisation software, for example, will allow you to play with moving those decimal values up and down, which you need to beat the market while maintaining your competitiveness.

What about monitoring your results? If you’ve chosen to use a dynamic pricing strategy to adapt your prices (and you should), we encourage you to try using a competitor price monitoring and price intelligence tool that will allow you to know what changes are occurring at all times, in what context, and what profits they entail. The correct management and processing of all this data will open the doors to exponential growth for your brand. What are you waiting for?

Category: Pricing strategy

Tags: ecommerce, pricing

Share this post:

Angela
Angela de la Vieja
Content Manager

The first dynamic pricing solution designed by and for retailers