The Startup
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The Startup

How to price anything

The psychology behind what we’ll pay…

1. What you see is what you want

Thanks to a human tendency called anchoring, when it comes to displaying a price, what you see first is what you want in the end.

2. How your price sounds (and looks) is incredibly important

There are numerous studies into how the presentation of a price affects how we feel about it. Tiny nuances can change whether someone believes you’re providing them with value or not.

  • Say it out loud. In a paper published in the Journal of Consumer Psychology, researchers found that prices that contained more syllables seemed drastically higher to consumers. This is thanks to how we read a number and its ‘fluency’. The harder a number is to ‘say’ the worse we feel about it. So $1,999.99 (one thousand, nine hundred, ninety nine, and ninety nine cents) feels more expensive than $1999 (nineteen ninety nine). The more syllables, the more we think it costs.
  • People love physically small numbers. Studies have shown that placing your price in the bottom of a page rather than the top makes people perceive it as lower. Even crazier, the physical size of your font can influence peoples’ understanding and feelings about it. Smaller fonts seem smaller in price.

“Thanks to processing fluency, people will perceive your price to be smaller if you display that price in a smaller font. This tactic is particularly effective when you contrast your price with a larger sized reference price.”

  • When you’re going for the big sale, be as exact as possible. When researchers at Cornell University buyers pay more money when prices are specific (e.g., $362,978 vs. $350,000). And while you might think this is to help with negotiation, what the researchers uncovered was that it was actually due to how we perceive numbers. Think about when you are most likely to use a precise number. Most likely when you’re dealing with smaller values. And even though you’re spending hundreds of thousands of dollars or more, that perception persists.

3. Spending hurts. Reduce the pain.

Have you ever felt buyer’s remorse? That sudden feeling after a purchase that you’ve made a terrible, terrible mistake?

  1. The timing of the payment (e.g., we feel more pain if we pay after we consume)

4. ‘Invisibly’ raise your price

We all want to make the most we can, but what if there was a way to raise your prices without your customers noticing?

5. Don’t compete on the lowest price (without adding context)

The worst case scenario of competing on the lowest price is that you win. The second worst is you don’t.



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Jory MacKay

Award-winning freelance writer and editor. Lover of film. Drinker of coffee. Say 👋