Pricing is more than just numbers—it’s psychology. Businesses, both large and small, use psychological pricing strategies to influence customer behavior, maximize sales, and increase profitability. But in today's digital marketplace, AI-powered pricing tools have revolutionized the way businesses set and adjust prices in real time.
The good news? Startups can leverage strategies and tools to compete with big brands by using psychological pricing strategies and AI-powered tools to support price changes based on consumer behavior.
People tend to perceive prices that end in .99 as significantly lower than the next whole number. For example, $9.99 feels much cheaper than $10.00, even though the difference is only a penny. This plays on the "left-digit effect," where consumers focus more on the first digit than the last, making the price seem more attractive.
Studies have shown that prices ending in .99 can encourage consumers to make a purchase. The price appears as a "better deal," which may result in more frequent and spontaneous purchases.
Many consumers have become accustomed to charm pricing. It's so prevalent that shoppers may be more likely to trust a price that ends in .99 or .95, considering it as a standard pricing method.
While charm pricing is effective in many cases, it may not be suitable for all businesses. Luxury or high-end brands, for example, might prefer whole-number prices like $200, as it conveys a sense of exclusivity and prestige. But for most businesses aiming for mass appeal, charm pricing can be a strategic advantage.
🔨 AI-Powered Tool: Intelligems helps e-commerce brands test different price endings to determine what converts best.