Psychology of Pricing Your Products
🥳 Psych - 326/500
Hello Reader,
I just wanted to say thank you as we celebrate 4th year of Psych.
This wouldn’t have been possible with your incredible support. ❤️
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What is it?
This paper explores the effectiveness of "just-below" prices (e.g., $9.99) compared to round prices (e.g., $10.00).
It analyzes 69 studies with over 40,000 participants to understand if just-below prices actually lead to higher demand, as marketers widely believe.
Major findings:
Just-below prices do increase purchase decisions, but the effect is small: However, the effect is much smaller than many marketers assume.
Price image is more favorable for just-below prices: People perceive just-below prices as lower & more discounted, even when the difference is only a few cents.
No impact on perceived quality: The study found no evidence that just-below prices are associated with lower perceived product quality, contrary to some prior assumptions.
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What do I need to know:
It emphasizes the need for a deeper understanding of the underlying psychological processes and encourages a more nuanced approach to pricing decisions in marketing.
Price image matters: The positive perception of just-below prices as a bargain plays a significant role in driving purchase decisions.
Contextual factors are crucial: The effectiveness of just-below pricing depends on various factors, such as the prevalence of just-below prices in the market, the design of the study, and cultural context.
Publication bias is a concern: Analyses suggested that publication bias might be inflating the true effect sizes, especially for purchase decisions and price image.
Source:
Just letting you know that these series with marketing + psychology are phenomenal! 🙂