Psychological Pricing Explained
Psychological Repricing is a dynamic price updating method typically used to adapt a pre-established ballpark figure for your final selling price. In other words, to adjust prices after you have worked out your costs and required profit margins (using cost plus pricing, for example). Psychological pricing goes a little deeper, delving further into customer habits and perceptions.
Price optimisation with psychological repricing
The most common, everyday use of psychological automatic price updating in business today, is the dropping of prices so that they end in 99 or 95 pence or cents. This gives customers the impression that the product is cheaper and so a little more guilt free and assuring to purchase. After all, £19.95 seems much more appealing to spend than £20.
Many customers have a tendency to notice the left most digits more so than the right digits. Therefore, £19.99 seems much closer to £19.00 than it does to £20. Furthermore, numbers in their twenties seem much larger than those in their tens, even if it is just by a few pennies. This is known as the left digit effect.
Benefits of psychological repricing
At just a small cost of literally pennies to your business, optimising prices using this method is a highly successful way to increase sales. You can continue price tracking competitors and use automatic price updating with the Repricing Company to keep your prices even more ‘psychologically’ desirable for customers. An easy way to increase sales!