When it comes to pricing, and pricing yourself, there are so many contributing factors. The first is that you need to cover costs, the second that you need to make a profit – a wage, and the third that you make a surplus so you have buffer for the future, savings, and the ability to invest in your business.
Coming in from the side of that equation is a number of psychological pricing trains of thought. These include Charm Pricing, where you “reduce the left most number by one” or in other words you make a $3.00 product a $2.99 product; Prestige Pricing, where you round up to a simpler number like taking an $8.96 product to $10; Comparative Pricing or Anchor Pricing, where you environmentally surround a price with other prices to make it look good – like creating a $100 option and a $10 option either side of a $50 option you actually want them to take – anchoring that main product well and truly in a position of value.
But today I wanted to share some pricing psychology research from 2014 that I found interesting.
Thomas begins with this simple summary:
When people are buying based on their feelings (e.g. hedonic products such as food and fashion, a spa experience), use round prices (e.g. €15, $200).
When people are buying for rational reasons (e.g. utilitarian products such as a washing machine, business services), use non-rounded prices (e.g. €15.95, $229.50).
Your customers will have higher preferences for your product and will be more likely to buy.
Feel free to read through Thomas’s report and the original paper, both linked above, but here’s the downlow: if a purchase/booking is hedonic – that is, in regards to pleasurable feelings, like a wedding – a rounded price to a whole number, or a moderately rounded number is more likely to appeal to the purchaser.
An example of a less desirable price for a wedding purchase: $1093 for a celebrant.
An example of a more desirable price for a wedding purchase: $1190 for a celebrant.
An example of a highly desirable price for a wedding purchase: $1200 for a celebrant.
Please don’t take that number as a suggested price for a celebrant – any number used there will offend someone who charges more, or less – but take the lesson away and apply it to your own price. After all, your price is part of your story.