With the Christmas season around, many people are on their toes to buy presents with the best deals available.
Little do they know, nearly everything seems like a good bargain during this season. Similarly to Black Friday, during the gift-giving season, customers take advantage of the bright red discount signs “-20%” thinking that they’re the ones cheating the system, while in reality, the system is the one cheating them.
Here’s what psychological pricing is about: Businesses like to take their products and price them at, let’s say, 49.99 instead of 50. Why? Well, The simple look of the price stated at “49” looks better than “50” despite the fact that there’s little to no difference between the two, this mind trick really does play the part in the incoming revenues.
Nearly all businesses use this pricing strategy as it has been proven to be one of the most successful, along with the premium pricing strategy, where the business sets the products’ price as significantly higher compared to the competitors, to make the illusion of their product being of higher quality. Let’s take bottled water as an example. Despite the fact that we have pretty much the same products standing next to each other, one being with a different packaging and more luxurious logo, and the other being a no-name brand and more basic looking design, both have an evident difference in their prices (one being let’s say, $1 and the other $3 or $4) which makes sense, as the production costs and visuals are worth more. But that is also how the brands make more money. People usually go for the pricier option thinking that it tastes better, looks more pleasing and generally is more appealing to the consumer. (In most cases that is true because water tastes different with each brand), yet even without that fact, people still choose whatever seems pricer and of better quality.
Now, I’m sure many of you have seen several discount signs outside of various stores, and perhaps you yourself have taken advantage of them. Sometimes, those signs are not necessarily as true as you may think they are. On Black Friday for example, people are often fooled by the large, evidently visible signs of “SALE” “-50%,-20%” or various promotions of “Buy 1 get 1 free” sort. Yet here is what usually happens on Black Friday promos in most stores: Businesses subtly raise the prices for their products a few weeks prior so that on the day of the sale, the prices are at their highest, but shown with a discount to the price they used to be at in the beginning. This trick surprisingly works as customers purchase the products, without necessarily needing them, but since the discount seems tempting, it’s hard for them to simply walk away.
Lastly, another great trick would be the decoy effect, meaning the brand having, lets say, 3, very same products but all of a different size, and all priced close enough for the customer to choose the most expensive option. A great example of this would be McDonald’s fries. For the small fries, you’d pay $1.39, $1,79 for the medium and $1,89 for large. And here comes the dilemma: You really don’t want the small fries because you’re hungry, so you prefer to get the medium fries, but now that the large fries cost only a dime more, you might as well buy the large. This is a great deal for both parties: for the customer, because they pay a bit more to get more food, and for the restaurant as they get paid for the most expensive option out of the three.
Now, these tricks are very common in the business world, and I’d say they are extremely effective. It’s not hard to play with people’s minds and all successful businesses know it; therefore, they use it to their advantage, and, quite honestly, they can’t be blamed. It’s not necessarily unethical and they get a large profit out of it.
Sources:
15 Psychological Tricks Big Brands Use To Sell More
Many people know about these tricks, but at the same time, many of us are manipulated by marketers. Although it can be difficult to avoid, I believe people can start to approach purchases more consciously and always remember their original intentions when making purchases. After all, when we go to the store for a pair of shoes, we do not think about buying two pairs for the promotion. Marketing is primarily psychology. Unfortunately, we tend to believe that we are smarter than stores and that we have outsmarted them, but this is just a psychological trick.
I agree with you that businesses often use psychological pricing and other pricing strategies to influence customer behavior and increase profits. It is important to be aware of these tactics and don’t make a fool of ourselves. Funny thing is that most of us know about it and still don’t care so much.
I like how these tactics are so popular and known to so many, and yet we still fall for them. I think it’s just nice to look at a discount sign and think you’re buying something for a lot less cheaper- while it’s probably twice the original price. I also have to agree with the water part- not all store-bought water tastes the same, so personally I don’t mind paying more if it means it won’t taste like metal.