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.
Red Zone Alert: No “it looks cheap” Strategy In…
However, there are places where you should NOT make your product “look cheap”.
That is when you sell high end or luxury based products, it’s a must that you round your prices up to a whole number, also called image pricing or premium pricing. For instance, $1000 appears as significantly more expensive than $999, therefore you should set your price high.
If the cost of your high end product is expensive, it won’t lower your sales but in fact engage more customers, why? because the law of the nature is…
Expensive = Good
Although this rule applies only to high end products for instance: famous handbags, automobiles, jewelery, cosmetics…etc, it obviously wouldn’t work if you priced a hot dog at $100 and call it a premium hot dog, right?
In fact, raising the price of your products could skyrocket your sales up.
However if you offer discounts or put your products in sale, the psychology behind prestige pricing will backfire, as a result:
- Your brand will lose trust and credibility.
- Your company will begin losing popularity.
- Sales will dramatically be in decline.
- The actual value of your products must be average/poor.
- Word of mouth from consumers will spread bad rumors about you.
See how one tiny pricing mistake can drive ridiculous psychological effects on your consumers?
Watch out! It’s important and serious damage could be done.
Prestige pricing is one of the most commonly used pricing tactic in the world, along with the famous “Buy One Get One Free” strategy – find out what is BOGOF.