Psychological pricing is an effective way to encourage sales in which most of the marketers attempt to influence the customer behavior. These methods are usually used to understand the behavior of the consumers toward a product or service. By increasing the price, the sales of the company is also increased. This however happens only if the price is strategically placed in the mind of the consumer.
These strategies are always confined to the customers’ perception and instead of appealing the rational side of the consumers they target the emotional side. The positioning of the product or service always influence the consumers to buy it. If we look closely and try to understand the human psyches then we find that they always approach an odd pricing strategy for example a toy worth $5 will not be preferable to a toy worth $4.99. The value of toy is almost the same but in the mind of the consumers $4.99 lies within $4 so they think that it has a low cost. Similarly it is also used for larger amounts like, if a house costs $18,999 instead of $19,000. You aim to buy the one that lies within the bracket of $18,000 because consumer thinks that it is comparatively low in $18,999 than $19,000.
This strategy helps to build a positive image of the brand that they provide quality with reasonable pricing. Target audience plays a very important role in this case because they are the ones who judge your brand in terms of giving high amount of sales. A high-end product/service may not be selling high by using odd pricing strategy, which aims to make the product seem more affordable. Don't forget to consider your competitors when choosing a psychological pricing method and setting your prices. Straying too far from similar products can make you less competitive.
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