Pricing

Anchoring

What we see first affects our judgement of everything thereafter

Zero Price Bias

We value something more when free over very cheap

Round Pricing Preference

We prefer and trust whole numbers over those ending in a 9

Decoy Effect

We’re more likely to buy B over A by adding C to make B look more attractive

Boundary Pricing

We're more likely to upgrade if the base price feels closer

Pairings

Pricing

Put decoy options in the same boundary

If the purpose of a cheaper decoy product is to highlight the relative value and attractiveness of a more expensive option, changing its price to sit within the same pricing boundary will supercharge any effects.

For instance, if you had a low price decoy product such as a half-sized mini muffin for $0.95, with a normal-sized muffin priced at $1.30, the decoy would be more effective at emphasising the normal muffin if it were easier to compare prices.

In this case, pricing the decoy muffin within the $1 boundary at or above $1 would allow people to more fluently calculate the value of a muffin that's double in size but only 30% more expensive.

Here, the appeal of a $0.95 bargain is outweighed by the spotting of greater value elsewhere, by making the cheaper bargain slightly less attractive and the more expensive bargain a bit of steal.

Pricing

Round your base product price

Common convention suggests that you should make full use of just-under prices such as .95 and .99 to encourage sales. However, If you're offering more than one product in your range, these seemingly-cheap prices can make the jump to the next product in the line appear more expensive, given how we encode and categorise price boundaries.

Instead, consider use of round pricing for your base product to achieve two things:

  1. Reduce the perceived cost of upgrading to the next, more higher value product in your range. This is due to the new base price now sitting in the same price boundary and therefore making any upgrades appear less expensive.
  2. Improve both the ease of numerical processing and implicit trust in your brand with whole, round numbers.

Research shows that any loss in revenue from a slightly increased price will be offset by a higher overall sale price as customers move up to a better product in your range.

Pricing

Anchoring

What we see first affects our judgement of everything thereafter

Zero Price Bias

We value something more when free over very cheap

Round Pricing Preference

We prefer and trust whole numbers over those ending in a 9

Decoy Effect

We’re more likely to buy B over A by adding C to make B look more attractive

Boundary Pricing

We're more likely to upgrade if the base price feels closer