BUSINESS NEWS & TRENDS - Pricing Strategies
We’d like to highlight these 8 pricing strategies that may or may not help your business adapt to the
changing economic climate. Each pricing strategy asks you to use psychology with your customers.
Most of these strategies have stood the test of time — for a reason. They play to human behavior.
Try some of these strategies and see what they do for your business:
1. The Nine and Zero Effect. People associate the number nine with value and zero with quality.
Look at the difference between fast food and a gourmet restaurant. A burger meal can sell for about
$4.99 while a gourmet entree at the best place in town may go for $30. So the psychology of pricing
isn’t so much about gaining additional sales because the price appears to be lower, it’s about what
the price communicates about
your offering. So which do you
want to communicate? Value or
Quality? Now you can price
accordingly.
2. Payments to Promote
Satisfaction. Anyone who has
ever paid for a gym
membership and quit the
second month has been part of
this pricing strategy. If you offer
a one-time payment, customers
will perceive the item free after
a while and not use it as often — thereby limiting satisfaction. Customers who pay more frequently
for a product or service use it more often and perceive more satisfaction. So you’re better off
charging monthly rather than a one time fee.
3. Prestige Pricing: Higher prices denote higher quality. Luxury brands are the perfect example of
this strategy. A latte at Starbucks has a higher perceived value than a basic coffee with cream.
Simply improving the look, packaging, delivery or promise of your product you can justify a higher
price and support a prestige pricing strategy.
4. Anchor Pricing: When consumers are unfamiliar with a product, they will use the highest priced
model within a category as an anchor. Private Label brands in the supermarket are a good example
of this strategy. They are placed close to the branded product and the price is typically 15% lower.
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