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4 classic psychological tricks in product pricing

4 classic psychological tricks in product pricing

Friday 15, 05 2020
In his book How Consumers Think, the author Gerald Zaltman states that up to 95% of buying decisions happen from the subconscious mind of the buyer.

That means that if the seller does not understand the emotions and beliefs that motivate buyers, it will be difficult for them to get money from potential customers.

Therefore, psychological pricing is a strategy that can help businesses increase sales.

Here are four psychological tricks that are considered "classics" and can have a strong effect on consumer shopping behavior.

Offer a "useless" price to create a "bird of prey effect".

You walk into the theater and see the following two prices for popcorn: small popcorn - 20,000 VND, large popcorn - 50,000 VND. At that time, you will think that you do not need a large cup of corn, and a small one is enough.

However, this consideration will change if you have a third choice: Small popcorn - 30,000 VND, Medium popcorn - 65,000 VND, Large popcorn - 70,000 VND.

In the second "scenario", most people would choose the largest and most expensive popcorn. The reason is that the difference between medium and large size is only 5,000 VND. Who would not want such a bargain?

The price in the middle may seem "useless" and does not bring any profit, but it actually has an impact because it has turned the "looking for cheap goods" attitude into a " looking for valuable items" one.

In psychology, this action is a form of cognitive bias. The human mind tends to make inaccurate judgments or believe in fallacies. To apply this effect to product pricing, businesses need to identify the product they need to increase sales and create two more prices to create a "bird of prey effect".

Sales by package

According to a study conducted by Stanford and Carnegie Mellon Universities, when faced with high prices, participants' brains responded with pain, and when the price drops, the area of the brain responsible for making the decision begins to be activated.

The trick of package pricing is to reduce the "pain of shopping", as when people putting multiple items in a package, buyers cannot evaluate each item individually at a specific price. 

This trick is also often used to sell luxury items and is very popular with car dealers. For example, Car price lists usually include added products and services such as GPS, sunroof, etc.

Microsoft also applies this pricing method for office applications Microsoft Office Suite, or McDonald's applies this trick to its expensive dishes.

When pricing packages, businesses need to be cautious and think strategically because customers will spend less if the package is not correctly combined.

The combination of the package must not reduce the value of each product. For example, avoid combining an expensive product with a cheap product because research results show that consumers will spend less on such packages.

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4 classic psychological tricks in product pricing

The effect of anchoring

Perhaps the anchoring effect is the most widely used psychological trick. The subconscious of consumers will "emit" a reference price from which they will judge the seller's price is high or low. However, the price is relative. If the enterprise affects that reference price, it will be easier for customers to accept the offering price.

The anchoring effect occurs when people make decisions based on the first information they receive. When the seller offers the price list and introduces the most expensive product in advance, the same effect is created because the buyer will use the first price as a reference for subsequent prices.

To use this trick, the seller needs to peg the price they want to "anchor" into the mind of the buyer and set it as the first price that the buyer can see or hear.

Take a step through the door

This trick is often used to generate leads. For example, advertisers can require an email address in exchange for a free E-book. Once these advertisers have reached the audience's inbox, they will step by step make bigger requests, such as asking potential buyers to buy an E-book or a valuable document.

One way to use this trick in pricing products is to give potential customers a free trial. When people have used the product for free, businesses will easily lead them to "upgrade" as well as to purchase the product. 


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