comparative pricing

What Is Comparative Pricing? (Definition and Examples)

comparative pricingWe’ve all experienced it.

Comparative pricing could arguably be the most prevalent pricing technique, even more widespread than fractional pricing or “buy one get one free“.

It’s more about choices.

In terms of the pricing strategist’s eye, it’s more commonly used naturally and un-deliberately rather than on purpose because the natural psychological effect takes place in many daily life cases.

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Odd pricing stated.

What Is Odd Pricing – Definition, Example, Meaning

Odd pricing stated.
Odd pricing stated.

This article talks about the world’s most famous and popular psychological pricing technique ever used.

Prices ending in 9, 95, 97, 99 are sometimes called “charm prices” – because they are a charm. (no pun intended)

In fact setting a price that are a couple of pennies below an evenly numbered price such as $10 can amazingly raise conversions up to a whopping extra 21-34% (depends on scenario).

Note this method has several different names including fractional pricing and odd-even pricing.

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Now this is prestige.

What Is Prestige Pricing – Definition, Example, Meaning

Now this is prestige.
Now this is prestige.

You might have heard of odd pricing when $9.99 performs better than a plain old $10.

But there are scenarios where you should completely avoid doing so or else you might end up losing plentiful of customers plus experiencing a great deal of side effects.

First, let me get this clear, the “9.99” trick is effective because it appears significantly lower than the next whole number point, which is 10.

By doing so, you are telling customers that your product “it looks cheap” which equates to higher affordability and that’s why they are more likely to purchase.

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Buy One Get One Free

What Is BOGOF – Definition, Example, Meaning

Buy One Get One Free
Buy One Get One Free

“BOGOF” is an abbreviation for “Buy One, Get One Free”.

As the name suggests, it is a pricing tactic which involves customers paying full price for one item and getting another for free.

This is one of the most popularly used pricing technique in the world, if you think about it in a mathematical way, it is a 50% off discount.

But in a typical consumer’s mind, when they see a free bonus, they’d be like “oh my… how can I possibly ignore this incredible offer?!”… “goes and purchases”.

That’s how the reality works, why do these tempting offers work?

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Let's take a closer look.

What Is The Definition of Psychological Pricing?

Let's take a closer look.
Let’s take a closer look.

To meaning of psychological pricing simplified, here:

A pricing strategy that specializes in inflicting psychological effects on consumers.

Common forms of pricing psychological techniques is the famous odd pricing technique.

Odd pricing focuses pricing in a way such as $19.99 instead of a full $20, this lowers the perceived value over its true cost, therefore encouraging more sales.

Be aware that odd pricing itself isn’t psychological pricing, it’s actually one of the subunits that fall under the main category called psychological pricing. Of course, there are many more pricing concepts and strategies involved.

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Speaking

What Are The Aspects of Psychological Pricing?

SpeakingThe psychology behind pricing can’t JUST be explained in a sentence.

In fact, the concept depends on a wide range of aspects, which will be listed out below.

But first…

I’d like to make sure you are clear of a fact. A mistake that most people make – most people confuse the term psychological pricing with the term odd pricing; odd pricing is actually just one of the subunits of the more general term.

If odd pricing is to psychological pricing, then algebra is to maths.

Get it? Odd pricing is just one way of using psychology in pricing, not psychological pricing ITSELF.

Anyway, let’s get to the aspects.

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“All our knowledge has its origin in our perceptions.”

What is Customer Perception of Value – Price Perception

“All our knowledge has its origin in our perceptions.”
“All our knowledge has its origin in our perceptions.”

Due to the customer perception of value, numbers do not always represent its true value in the brains of human beings – a price may appear expensive, but in another way it can be perceived as really cheap.

How is this possible? It is the psychology behind our everyday mental processes.

Leonardo da Vinci (1452-1519) understood this principle of psychology centuries ago, he once said:

All our knowledge has its origin in our perceptions.

In fact, how we react to numbers and how we think about any particular number is determined by the perceptions generated by our minds.

We make different perceptions each time and each time they can potentially make us believe something is less different (or more) to something’s true value.

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Everything comes at a price.

Psychological Pricing Advantages And Disadvantages

Everything comes at a price.
Everything comes at a price.

You might have heard of pricing by the method of understanding our humanly behavior.

Despite it being a commonly targeted debate subject, there are several upsides and downsides of putting this marketing tactic into practical application.

Psychological pricing is actually a double-edged sword.

Likewise, everything in the world costs a price: it it does you good, it will also do you bad. Maybe not today, but under intermittent intervals.

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