The Psychology of Pricing: A Gigantic List of Strategies • Hacker News Board

Re: The Psychology of Pricing: A Gigantic List of Strategies

#41

Post by thomasahle » Thu, May 07, 2015, 8:27 AM UTC

erikb wrote: post #38

imron wrote: post #30

I know the arguments behind it, and I know the research shows it brings slightly higher conversions, but I always see charm pricing (e.g. 2.99 vs 3.00) as an insult of sorts to my intelligence. It's like the company is saying they don't think their customers have the mental capacity to reason that 9.99 is effectively the same price as 10. It's even doubly meaningless for some products in Australia, because with 5c be…

Can't find it any more, but in some literature I was reading that actually it's not so clear as people think. In some situations -1ct works well in other situations other prices like $10.23 work much better. I don't remember the requirements, though. In any case it's bad to do something that you haven't tested yourself for your market. So if you sell something try different prices and pricing strategies and see what…

Well, tfa says it pretty clearly: When asked to estimate the real value of TVs priced at 4998.10, 5000 and 5012.56 the middle one was estimated nearly $500 lower than the others.

Same goes for houses and other situations where you're likely to be conceived as having rounded up.

Re: The Psychology of Pricing: A Gigantic List of Strategies

#42

Post by awjr » Thu, May 07, 2015, 8:51 AM UTC

erikb wrote: post #38

imron wrote: post #30

I know the arguments behind it, and I know the research shows it brings slightly higher conversions, but I always see charm pricing (e.g. 2.99 vs 3.00) as an insult of sorts to my intelligence. It's like the company is saying they don't think their customers have the mental capacity to reason that 9.99 is effectively the same price as 10. It's even doubly meaningless for some products in Australia, because with 5c be…

Can't find it any more, but in some literature I was reading that actually it's not so clear as people think. In some situations -1ct works well in other situations other prices like $10.23 work much better. I don't remember the requirements, though. In any case it's bad to do something that you haven't tested yourself for your market. So if you sell something try different prices and pricing strategies and see what…

Restaurant pricing. The "posher" end of the market go for whole numbers (e.g. £10) . Whereas the cheaper end focuses on charm pricing (e.g. £9.99).

Re: The Psychology of Pricing: A Gigantic List of Strategies

#43

Post by tormeh » Thu, May 07, 2015, 9:21 AM UTC

thomasahle wrote: post #41

erikb wrote: post #38

Earlier quoted context omitted.

Can't find it any more, but in some literature I was reading that actually it's not so clear as people think. In some situations -1ct works well in other situations other prices like $10.23 work much better. I don't remember the requirements, though. In any case it's bad to do something that you haven't tested yourself for your market. So if you sell something try different prices and pricing strategies and see what…

Well, tfa says it pretty clearly: When asked to estimate the real value of TVs priced at 4998.10, 5000 and 5012.56 the middle one was estimated nearly $500 lower than the others. Same goes for houses and other situations where you're likely to be conceived as having rounded up.

Interesting. Wasn't something like this in the undercover used car salesman article a while back as well? You should always come up with weird numbers so the customer doesn't think you made it up.

Re: The Psychology of Pricing: A Gigantic List of Strategies

#44

Post by joeyspn » Thu, May 07, 2015, 9:28 AM UTC

Conversion rate of 2 --> 2.39%

Converison rate of 1.99 --> 5.2%

Mind = Blown. I mean, I knew the *.99 affected the consumer perception about the price, but not in such a huge way... Fantastic article (and blog).

PS: The "leaving know" modal is annoying, I was just trying to switch tabs

Re: The Psychology of Pricing: A Gigantic List of Strategies

#45

Post by WA » Thu, May 07, 2015, 9:30 AM UTC

joeyspn wrote: post #44

Conversion rate of 2 --> 2.39% Converison rate of 1.99 --> 5.2% Mind = Blown. I mean, I knew the *.99 affected the consumer perception about the price, but not in such a huge way... Fantastic article (and blog). PS: The "leaving know" modal is annoying, I was just trying to switch tabs

Didn't read the article yet, but I tried this: 2 euro vs. 1.99 euro and it made 0 difference in conversion rates. I guess it depends on the product. Maybe I should repeat the test, too.

Re: The Psychology of Pricing: A Gigantic List of Strategies

#46

Post by csomar » Thu, May 07, 2015, 9:42 AM UTC

I hate SPAM and promise to keep your email safe.

Then why are you asking for my email? I hate it when they ask for your email for something can be provided without. And the worst part is that it doesn't tell you if it's going to send more emails.

Re: The Psychology of Pricing: A Gigantic List of Strategies

#47

Post by danuker » Thu, May 07, 2015, 10:36 AM UTC

Animats wrote: post #28

This is a great How to be Evil manual. "If you decide to downsize your product, you should reduce the size of all three dimensions — height, width, and length — by an equal amount. Consumers are less likely to notice a change in all three dimensions." "People will perceive your price to be smaller if you display that price in a smaller font." "People will perceive your price to be lower if it contains fewer syllables…

When I shop, I look at the quantity. If my chocolate has 90 grams instead of 100, I'll immediately put it back and look for another brand - because it's too hard for me to compute how much I would get swindled of.

Re: The Psychology of Pricing: A Gigantic List of Strategies

#48

Post by charles2013 » Thu, May 07, 2015, 10:41 AM UTC

a colleague sent me a link to "tactic 14." after reviewing the citations i'm skeptical of the rest. it appears the author misunderstood some research he cited.

the thesis for tactic 14 is:

> Anchoring not only works for prices, but it also works for any number, regardless whether that number is a price.

the SSN example demonstrates anchoring based on price (not just any high number). the results of this experiment would have likely been the same if people rolled dice.

and the only experiment [#4 of 5 from adaval and monroe (2002)] which tested "irrelevant dimensions (e.g. weights)" vis-à-vis priming with high/low prices seems to have been poorly designed and produced questionable results. (it should be noted the test methods were also sufficiently different than the UX illustrated in the article.)

so based on the cited research there's nothing that leads me to believe it makes sense to use "any high number" to make my price look better. and if i've understood adaval and monroe (2002) correctly this could actually create a contrast effect (and diminish value perception).

additionally, the suggestion in the article -- "join 2,387 happy customers" -- could also be an example of social proof, making it difficult to ascertain the cause of behavioral change. (was it any high number, or all those happy customers? or both?)

and lastly/separately, why base pricing strategy on the offline behaviors of a bunch of starving students looking for extra credit? it's 2015. where's the shopping cart data?

Re: The Psychology of Pricing: A Gigantic List of Strategies

#49

Post by erikb » Thu, May 07, 2015, 11:28 AM UTC

tormeh wrote: post #43

thomasahle wrote: post #41

Earlier quoted context omitted.

Well, tfa says it pretty clearly: When asked to estimate the real value of TVs priced at 4998.10, 5000 and 5012.56 the middle one was estimated nearly $500 lower than the others. Same goes for houses and other situations where you're likely to be conceived as having rounded up.

Interesting. Wasn't something like this in the undercover used car salesman article a while back as well? You should always come up with weird numbers so the customer doesn't think you made it up.

Maybe that's the article, yeah.

Re: The Psychology of Pricing: A Gigantic List of Strategies

#50

Post by erikb » Thu, May 07, 2015, 11:32 AM UTC

thomasahle wrote: post #41

erikb wrote: post #38

Earlier quoted context omitted.

Can't find it any more, but in some literature I was reading that actually it's not so clear as people think. In some situations -1ct works well in other situations other prices like $10.23 work much better. I don't remember the requirements, though. In any case it's bad to do something that you haven't tested yourself for your market. So if you sell something try different prices and pricing strategies and see what…

Well, tfa says it pretty clearly: When asked to estimate the real value of TVs priced at 4998.10, 5000 and 5012.56 the middle one was estimated nearly $500 lower than the others. Same goes for houses and other situations where you're likely to be conceived as having rounded up.

This says it clearly for TV prices in the interviewed customer segment and house prices in the interviewed customer segment. It doesn't mean that other situations don't do better with other prices.

Working in IT I have some friends who would pay $503.71 more for the same TV (compared to the price tag on the TV itself) if you present them a complex mathematical formula for why that TV should be valued higher, but who wouldn't pay $503.70 more because that's not what the formula says.

What I want to say by that example: Different people have different thinking and test your customers, don't assume you are right because a book says so.