When I was a kid and I would see a price tag for $9.99, I would roll my eyes. Ha, I thought, You’re not fooling anyone. WE ALL KNOW it basically costs $10!
It was like everyone was playing pretend: we were all pretending that $9.99 was a much better price than $10, even though everyone knows that one cent hardly makes a difference. You’re not getting a bargain by saving one cent.
Why are we all playing this game? I wondered. Why don’t they just choose a nice, clean round number?
Well, young Eva, it’s because reducing the left digit by one can improve your conversion rate! Just look at this conversion table from Gumroad. “Charm pricing” works because when our brain scans the price it moves from left to right, and the first digit it sees – the digit you just lowered by one – “anchors the perceived magnitude.” In other words, your smart-yet-manipulatable mind perceives the first digit as the true price.
So do you use this tactic, even though it involves some trickery? It’s a quandary, because of course you want to sell your products. But maybe your inner child rolls her eyes at the transparent tomfoolery of this tactic. Or maybe you are the kind of salesperson who doesn’t want to manipulate her clients.
Are you manipulating me?
But IS it manipulative to take advantage of human psychological quirks? Is it taking advantage when everyone does it, from Target to high-end executive coaches?
Let’s say… yes. I might be shooting my sales in the foot, but hear me out:
- I want you to buy because you’re excited about the product. I want you to buy no matter what the price (within reason!) because it’s that right for you.
- Let’s respect each other’s brains. We know they are easy easily tricked and influenced, so let’s… not do that to each other. By selling you something for $500 instead of $499, I’m saying, let’s cut the bullshit. You know that $499 is one dollar less than $500, even if your brain doesn’t. You can explain to your brain what’s what, and know that I’m not try to manipulative you with my pricing.
- Also, selfishly, I like clean numbers. They make the math easier!
You can make the case that it’s not really manipulation to use charm pricing, it’s more of… a gentle nudge. Hey, I know you want to buy this but unless you’re incredibly wealthy or an enlightened being with a wholly abundance mindset, you have reservations about parting with hard-earned cash. So I’m going to make it easier on your mind, by pricing at $499 instead of $500. You’re welcome!
That is a valid argument. It comes down to preference, or how you feel about exploiting human psychology.
Strategic manipulation – how’s it feel?
Exploiting human psychology might be a smart strategic choice for you. It might also make you feel good. For example, when I bought my first business coaching package, I was given a “fast action incentive” in the form of a 12% price reduction if I made my decision within a week. I hemmed and hawed and made my decision within a week because I wanted the coaching and I wanted the discount.
I don’t know how my coach “feels” about offering it – maybe it makes her feel good to give prospects a little reduction, a reason to make a decision quickly instead of agonizing over it. Maybe the reduced rate is actually her base price, and the “full price” is an inflation (clever!).
I know it made ME feel good – I felt like I was getting a bargain, and it was a relief to make my decision quickly, instead of hemming and hawing forever. Of course, if her reduced price is her base price, I was tricked. But I’m happy with what I’m getting, so I don’t feel duped.
None of these pricing tactics are “bad” or “good” – they just ARE, and how YOU feel about using them is up to you. Some tactics will seem harmless and appropriate, while others might seem manipulative and exploitative. Either way, they’re fascinating. If you’re curious, Nick Kolenda has an impressive list.
