Friend-of-the-list and AI and Analytics Specialist, Genevieve Hayes, came back with this question re: charm pricing.
There is psychological evidence to suggest that charm pricing does work. However, if no one wants your product or service to begin with, it doesn’t matter how “charming” the price is, they’re still not going to buy it. I would love to know your thinking around why you see this as a misbelief.”
She’s right. There is evidence it works. It’s one of the many cognitive biases we all have. 🙂
However, there are things that, imo, don’t necessarily benefit from charm pricing —especially when using the mainstream one ending in 9.
One of the reasons is that it gives the impression things are cheaper.
That could work against you, if you’re trying to set up your brand/product/services at the high end of the spectrum.
For example, trying to set a premium, customized service and end it in 99. It anchors your customers on the lower number (4,99; 799; 51,99; etc.).
It builds this gut reaction of “Oh! That’s not that expensive!”.... when in reality, you’re trying to be seen as the premium (or most expensive option).
On the other hand, there are other examples that do use charm pricing to set it the right expectation (of premium).
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For example, Louis Vuitton uses a wide range of charm pricing, yet focused on the high-end (3800, 3200, 580, 480, 4900, 2800, etc).
The misbelief I find is focusing solely on 199, 179, 1799, XX.99
What seems like a common denominator is that most businesses and solo consultants tend to only use the .9 charm price to attract buyers, as if it’d be a bulletproof formula.
In reality, it might be hurting their brand, promise and positioning without them even noticing it.