What Is Psychological Pricing?

Psychological pricing strategy is the use of the principles of psychology in the establishment of product prices, according to the consumer psychology of different types of consumers to set prices, it is a combination of science and art of pricing. When an enterprise adopts a cost-oriented, demand-oriented or competition-oriented pricing method to set a basic price, this price may not be acceptable to the market and consumers. In order for the price to be accepted by consumers and the enterprise itself to be satisfied, the original base price should be revised according to different consumer psychology. Different companies have different pricing goals and different consumer groups have different consumer psychology, so they should have different psychological pricing strategies. Common psychological pricing strategies are: mantissa pricing strategy, integer pricing strategy, prestige pricing strategy, solicitation pricing strategy, custom pricing strategy, etc.

Mantissa Pricing Strategy

Mantissa pricing refers to the use of mantissas instead of whole numbers when pricing a product, which makes consumers feel that the product is particularly cheap when they buy it. The mantissa pricing strategy is based on the implied effect, which implies that the price of the consumer's product is carefully calculated by the merchant and has high credibility. Surveys show that small differences in price mantissas often give different effects. Customers usually think that a 199 yuan product is much cheaper than a 200 yuan product, and a 201 yuan product is too expensive, in fact it is only 1 yuan less. The mantissa pricing strategy can be widely adopted mainly because it has the following two psychological functions: First, it can give consumers a low price feeling. If a certain product is priced at 99 yuan, although it is only 1 yuan less than 100 yuan, people will habitually think that it is an expense of tens of yuan, which is cheaper. And if the price of the same product is set at 100 yuan, people will think that it is an expense of hundreds of yuan, which is much more expensive. Second, it leaves consumers with a pleasant feeling. In different countries and regions, due to the influence of customs, cultural traditions and beliefs, consumers often have preferences or taboos on certain numbers. For example, the Chinese people generally like "8", "6", "9". I think "8" means getting rich, "6" means six or six great luck, good luck, "9" means long time; Americans like "7", think "7" means luck, and taboo "5", " 3 ". These numbers are considered to represent doom and disaster.

Psychological pricing value pricing strategy

Value pricing strategy, also known as prestige pricing strategy, refers to a pricing strategy that sets the price of the products of stores and enterprises that are prestigious among customers higher than that of general products. It is a price strategy based on consumers' trust in brands and products. Contrary to the mantissa pricing strategy, which caters to consumers 'desire for integrity, the prestige pricing strategy caters to consumers' high-price display psychology. This is because consumers are willing to pay high prices for certain goods due to external stimuli such as related groups, their class, status, and identity, so as to achieve the purpose of showing their identity, status, and self-worth.

Psychological pricing solicits pricing strategies

The solicitation pricing strategy refers to the low price of certain products to attract customers, the purpose is to attract customers to buy other low-cost products, so as to increase sales. This pricing strategy is more commonly used in supermarkets. To adopt the solicitation pricing strategy, we must pay attention to three aspects: First, the determination of special low-priced products. This kind of product must not only have a certain appeal to customers, but also cannot be so high that a large number of low-priced sales will cause large losses to the enterprise; the second is to have sufficient quantities to ensure supply, otherwise customers who have not purchased special products will There is a feeling of being fooled, which will seriously damage the corporate image. Third, attracting customer attention is a prerequisite for increasing sales. When consumers come because of special prices and other factors, we must pay attention to take measures to distract customers' attention, such as placing special products in the store's position or adding POP advertisements for other products on the site. After customers enter the store, they pick up the specials and leave.

Psychological Pricing vs. Pricing Strategy

The comparative pricing strategy refers to determining a moderate, rather than a low price, for a particular product that will be displayed next to a higher-priced product of the same or competing trademark. This strategy is based on the so-called isolation effect. The isolation effect holds that if a commodity appears next to a higher-priced alternative, it will be more attractive than it appears alone. This strategy is often used in the pricing of supermarket products. They often indicate the original price and the promotional price in the promotion, and indicate the date of the promotion. After a period of time, the original price is restored. A French franchise store bought two kinds of "fawns" with the same shape and price, but different colors. Few people ask for them after they come to the cabinet. The shop owner came up with the idea: make a difference. He increased the price of one of the fawns from 3 yuan to 5 yuan, and the price of the other was unchanged. The two toys with sharp price differences were placed on the same counter, and the deer that raised the price quickly sold out. In contrast, consumers have the illusion of price, either making higher prices higher or lower prices, or miscalculating the price gap. Merchants can make use of this psychological illusion and make appropriate adjustments in pricing based on market characteristics and business objectives.

Differential pricing strategy for psychological pricing

Different pricing strategy refers to the strategy of setting different prices for the same product for different customers and different markets. In order not to lose customers, differentiated pricing strategies can be used. For example, Northwest Airlines offers very favorable prices to customers who used to buy old tickets on Northwest flights. This encourages consumers to be "loyal" to Northwest Airlines. Now merchants are buying a certain amount or more to give a certain discount and rebate promotion, which is also a kind of differential pricing. Differential pricing allows merchants to earn more profits without losing customers.

Psychological pricing fuzzy pricing strategy

Fuzzy pricing strategy is also called combination pricing strategy, which is to combine some best-selling products with new products or slow-moving products for combined pricing sales. The combination of best-selling products and new products is helpful for companies to open up sales for new products, and the combination with slow-moving products is helpful to promote product sales. Changing product packaging is also a kind of fuzzy pricing. For example, the introduction of small packaging products has lower prices, giving customers the illusion that the product is very cheap. In fact, such products have higher profits, and lower the threshold for purchase. It is easy to make customers impulsive. The desire to buy also brings more profits to the merchant.

Psychological pricing habits pricing strategies

Customary prices are prices that consumers have adapted to in long-term market exchanges. This pricing strategy is suitable for commodities that are consumed daily and in large quantities. Because consumers are more sensitive to changes in the prices of such products, companies should fully consider the habits of consumers when pricing these products, and adopt a "habit becomes natural" pricing strategy. The prices that consumers are used to should not be easily changed. Reducing prices will make consumers wonder if there is a problem with the quality of the product. Increasing prices can create consumer dissatisfaction and lead to a shift in purchases. When it is necessary to raise prices, measures such as changing packaging or branding should be taken to reduce the resistance and guide consumers to gradually form new customary prices.

Psychological pricing ladder pricing strategy

Ladder pricing strategy refers to the promotion of product sales by discounting products from low to high in stages. It takes advantage of the consumer's mentality: "I do nt buy today, I will be bought by others tomorrow, or I will start with a strong one." A businessman in the United States opened a store in downtown Boston, widely advertising the use of "ladder prices Information about products sold at reduced prices, while specific products are only marked with price, listing time, and until sold out . The method is: sell at the full price in the first 12 days, and reduce the price by 25% from the 13th to the 24th day; reduce the price by 75% from the 25th to the 30th day; and from the 31st to the 36th day, if it is still not sold, then Send to charity. In fact, many goods are often bought by customers without price reductions. This is a clever discount strategy. Although the discount, the uncertainty of the discount ratio and the uncertainty of the discount activity time make consumers anxious, worried that they cannot catch up with the cheap, but consumers do not take into account the relationship between discount and quality Considerations ^[1] .