(III) Psychological pricing strategy
Psychological pricing strategy refers to the use of consumer psychology to consciously set product prices higher or lower in order to expand sales. Psychological pricing strategies mainly include decimal pricing, integer pricing, prestige pricing, habit pricing, solicitation pricing, and tiered pricing.
1. Decimal pricing
Decimal pricing, also known as “fractional pricing” or “incomplete pricing”, is to set a non-integer price ending with a decimal. Most consumers are willing to accept decimal pricing such as 0.99 yuan and 9.98 yuan when purchasing products, especially general daily necessities. Consumers will think that this price has been accurately calculated and will not suffer a loss, thus generating a sense of trust in the seller. At the same time, although the price is only a few dimes or cents away from the integer, it gives people a feeling of being one digit lower, which meets the consumer’s psychological desire to “seek cheapness”. This strategy is usually applicable to daily necessities.
Research shows that people tend to buy products ending in 9. We call this phenomenon the “left number effect”. Most people prefer to read from left to right. Since consumers always hope that the price is as low as possible, if the last digit is 9, it can make people feel that the price is relatively low, and naturally they are more willing to buy the product.
2. Integer pricing
Integer pricing is the opposite of last digit pricing. Companies intentionally set product prices as integers to show the reliability of product quality. Integer pricing is mostly used for high-priced durable goods or gifts, as well as products that consumers are not familiar with. For high-end products with high prices, consumers pay more attention to quality and often use price as one of the criteria for measuring product quality, which easily creates a feeling of “you get what you pay for”, which is conducive to sales.
3. Prestige pricing
Prestige pricing is to target consumers’ psychology of “cheap goods are not good, high prices must be good quality”, and set high prices for products that enjoy a certain reputation and high credibility in the minds of consumers. Many high-end brand-name products and scarce products (luxury cars, high-end watches, brand-name fashions, celebrity paintings, jewelry and antiques, etc.) enjoy extremely high prestige value in the minds of consumers. People who buy these products often do not care about the price of the product, but are concerned about whether the product can show their identity and status. The higher the price, the greater the degree of psychological satisfaction.
4. Habitual pricing
Some products have formed prices that consumers are adapted to in the long-term market exchange process, which is called “habitual pricing”. When pricing such products, enterprises should fully consider the habitual tendencies of consumers and adopt a pricing strategy of “habit becomes nature”. Prices that consumers are accustomed to should not be changed easily. Lowering prices will make consumers doubt the quality of products; raising prices will make consumers dissatisfied and lead to a shift in purchasing behavior. When prices have to be raised, measures such as changing packaging or brands should be taken to reduce consumer resistance and gradually guide the formation of new habitual pricing.
5. Attractive pricing
Attractive pricing is a pricing strategy that is designed to meet consumers’ desire for “cheapness” by setting product prices lower than the general market price, and even lower than the cost of individual products, in order to attract consumers and expand sales. Although several low-priced products do not make money or even lose money, from the perspective of overall economic benefits, the company is still profitable because low-priced products drive the sales of other products.
6. Tiered pricing
Tiered pricing refers to dividing similar products into several tiers, setting a price for each tier, in order to simplify transaction procedures and save consumers’ shopping time. For example: products such as shoes, socks, and underwear are priced from small to large sizes.