“For many years researchers have investigated customers’ response to product pricing,” notes KnowThis.com in their “Market Pricing: Psychological Method” article. “Some of the results point to several interesting psychological effects price may have on customers’ buying behavior and on their perception of individual
So-called “odd-even” pricing has become commonplace as a result “based on the belief that certain prices or price ranges are more appealing to buyers,” writes the BusinessDictionary.com
KnowThis.com explains:
“Odd-even” pricing relates to whole number pricing where customers may perceive a significant difference in product price when pricing is slightly below a whole number value. For example, a product priced at (US) $299.95 may be perceived as offering more value than a product priced at $300.00. This effect can also be used to influence potential customers who receive product information from others. Many times a buyer will pass along the price as being lower than it is either because they recall it being lower than the even number or they want to impress others with their success in obtaining a good value. For instance, in our example a buyer who pays $299.95 may tell a friend they paid “a little more than $200” for the product when in fact it was much closer to
$300.3
 |
“Originally, this practice was meant to prevent pilfering of cash by forcing a cashier to open the cash-register (to pay change to the customer) and thus register the transaction,” notes BusinessDictionary.com in their explanation of odd-even
 |
“Another psychological effect, called prestige pricing, points to a strong correlation between perceived product quality and price,” KnowThis.com continues:
The higher the price the more likely customers are to perceive it has being higher quality compared to a lower priced product. (Although there is point at which customers will begin to question the value of the product if the price is too high.) In fact, the less a customer knows about a product the more likely they are to judge the product as being of higher quality based on only knowing the price. Prestige pricing can also work with odd-even pricing as marketers, looking to present an image of high quality, may choose to price products at even levels (e.g., $10 rather than
$9.99).5
“Price lining or product line pricing is [another] method that primarily uses price to create the separation between the different models,” further explains KnowThis.com in their “Market Pricing: Price Lining Method” article:
With this approach, even if customers possess little knowledge about a set of products, customers may perceive they are different based on price alone. The key is whether the prices for all products in the group are perceived as representing distinct price points (i.e., enough separation between each). For instance, a marketer may sell a base model, an upgraded model and a deluxe model each at a different price. If the differences in features for each model is not readily apparent to a customer, such as differences that are inside the product and not easily viewed (e.g., difference between laptop computers), then price lining will help the customer recognize that differences do exist as long as the prices are noticeably
different.6
“Just because something is cheap doesn’t mean it’s a good deal,” writes Roberto A. Ferdman for The Washington Post:
Several of America’s largest food manufacturers have been shifting their retail strategy, selling less of their packaged foods in traditional grocery stores and more of those foods in dollar and discount stores, according to a recent Reuters
story.… In order to offer the facade of affordability, manufacturers like Kraft are selling food in smaller packages. These granola bars, sauces, cereals, and prepared meals look like they cost less, but actually are far more expensive on a per ounce basis, according to
Reuters.… In other words, people go to Dollar General to save, because they have to. And according to this Reuters story, they’re buying food that looks cheaper but is ultimately costing them
more.7
 |
| Neuroscience for Everyone! |
“Bigger is better” has long been a guide to drive even the smallest decisions. Size matters they say, and Katherine I. DiSantis et al studied “Plate Size and Children’s Appetite: Effects of Larger Dishware on Self-Served Portions and Intake” in the Journal of the American Academy of Pediatrics. They concluded that:
Children served themselves more with larger plates and bowls and consumed nearly 50% of the calories that they served. This provides new evidence that children
