4 reasons not to use psychological pricing online

[jrineakter]

You don’t have to be a pricing expert to know that the number 9 in prices often works wonders. By dipping just below a round number, sales can sometimes increase dramatically. Whether it’s a car for 9,990 euros or a song on iTunes for 99 cents; psychological prices have a special appeal to the consumer. This is as true on the internet as anywhere else. And yet. There may indeed be reasons to be careful with the magic 9 online . I’ll give you four.


1. You can become a victim of your own success
Let us first zoom in on the nature of the psychological price effect. The magical effect of the number 9 has been demonstrated in many experiments . The structure of such experiments is as simple as it is convincing: confront one half of the target group with offer A: fashionable summer blouse for 35,- and the other half with offer B: fashionable summer blouse for 39,-.

Pricing_2
Offer B

pricing_1
Offer A

As long as the test subjects are not aware bosnia and herzegovina telegram number list of the other offer, you should not be surprised if more people accept offer B than offer A. In one of the experiments, the difference was even 24 percent. More turnover and a higher margin, that of course calls for an explanation. It is assumed that the consumer interprets a price with a magic 9 as an attempt by the entrepreneur to arrive at an acceptable sales price. The customer probably thinks something like: 'Hey, 39 euros, that can't be a coincidence. The shopkeeper will have arrived at 42 or 43 euros when calculating the normal sales price. He must have been afraid that that price did not seem attractive enough. So that gives me the opportunity to buy quality in the forties, for a price in the thirties. Advantage!'

This effect could be even greater online than in a real store, because as a customer you cannot feel, smell, try on, see the colour in daylight and so on. The customer is dependent on the picture and the price for his or her quality judgement.

Isn't that great for a profit-maximizing entrepreneur? Yes, but be careful. If the customer receives his order at home and does not find the expected quality of 'in the forties', the package will be returned. It is possible that the return ratio will skyrocket and you will end up with nothing from this product. Except perhaps a few disappointed and suspicious customers.

2. Psychological pricing does not always appear cheaper
We assume that psychological prices look cheaper than they are. However, that does not always have to be the case. An example to make clear what I mean:

Pricing_3

The left price tag is a round number and 2.50 higher than the right price tag. However, an HDTV with the left tag will generate more sales than the same device with the right tag. Research seems to show that your product will appear more expensive if there are more characters on the price tag. Currency symbols, periods, commas and decimal places are best left out as much as possible. So when you choose a psychological price, make sure that the result is visually acceptable. 7499,- would probably have been better, and 7990,- might have been even better.

3. You can exclude entire search categories
By going just below a round amount, you sometimes unknowingly exclude entire groups of potential customers. Suppose you put a house up for sale on Funda with an asking price of €399,000. Let's assume that for the majority of house hunters the bandwidth within which they search is €50,000. Then everyone who searches in the price category of €350,000 to €400,000 will see your house. But anyone who searches in the price category of €400,000 to €450,000 will not see your house.