Why do so many prices end in .99 cents? Why does it seem like most businesses that offer levels offer 3 options? As a business owner, you know that these pricing trends are no accident. They are a marketing strategy that uses the psychology of pricing to help entice people to buy.
What is the psychology of pricing? According to Wikipedia, it is “a pricing and marketing strategy based on the theory that certain prices have a psychological impact.” In simple terms, this means it’s a pricing strategy that encourages the customer’s brain to think they are getting a deal or a great price.
Examples of Psychological Pricing
Let’s use .99 cents as an example. Doesn’t it seem silly to price something at $5.99 instead of $6? What are you really gaining with a one-cent difference? We can tell you that one-cent difference has nothing to do with increasing margins and everything to do with the customer’s perception of the product.