Understanding the “Psychology” behind product pricing
As marketers, one must be naturally strong enough to understand numbers and analyze key metrics. A few weeks back when I started working on pricing of one of our products I realized a product price is not just a mere number and there is so much more to it.
Arriving at an ideal pricing is as important as getting you’re product/ service market-ready with the right features and you simply cannot afford to get it wrong. So without much further ado let me explain the “Psychology” behind product pricing.
Go back to the last time you went to a grocery store or visited an e-commerce website you would realize an ample number of products having a price ending with a 9 or 5. Why is it so?
The human brain is so complex and every individual has a different thought process before making a buying decision. But there is one common factor that influences a buyer's decision which is the last number in a product’s price!
Studies have proven that there’s a drastic difference in pricing a product at 999 rather than 1000 or 19.95$ rather than 20.00$.
This method of pricing is called “psychological pricing” or “charm pricing”
Apple has used this pricing strategy for all its products consistently over the years.
10 years later, Apple still sticks to this pricing strategy. Must have worked really well for them😁
This pricing model is even more key when it comes to daily essential where the buying decision is taken spontaneously in a few seconds. Big basket, utilizes this pricing model for most of their offering on its website.
Cheers for reading, I hope you’ll be paying close attention to the digits the next time you shop!
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