Price Design
- Group Small Words Near a Price
- Make Sale Prices Look Different
- Place Prices Toward the Left
- Show Two Multiples of a Price Nearby
- Display Immediate Prices in Large Fonts
- Display Red Prices to Men
- Reduce the Size of Currency Symbols
- Sort Prices From High to Low
- Reframe Prices Into Smaller Base Values
- Add Space Between Discounted Prices
- Shrink the Symbolic Size of Payments
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- Place Discounts Next to Dissimilar Products
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- Imply Discounts When Possible
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- Place Your Target Plan in the Center
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- Display Good Deals in Ugly Fonts
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- Animate Prices With Light Physics
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- Insert Large Numbers Near Prices
Price Digits
- Reduce the Phonetic Size of Prices
- Insert Alliteration into Prices
- Align Product Type With Digit Type
- Reduce the Left Digit By One
- Repeat Digits to Grab Attention
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- Reduce Digit Averages in High Prices
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- Sell Upgrades Above Round Thresholds
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- Charge High Prices With 95-Endings
- Request a Precise Range of Prices
- Tailor Prices Toward Names or Birthdays
Price Psychology
- Ease Comparisons of Your Price
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- Add an Expensive Product to Catalogs
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- Describe Your Product Before the Price
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- Request Payments From Painless Methods
- Offer a Similar (Yet Worse) Product
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- Charge a Small Fee for Effortful Trials
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Bundles
Promotions
- Discount High Prices By Amount Off
- Separate Your Discounts When Possible
- Give Round or Precise Discounts
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- Let Customers Win Their Discount
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- Limit Bulk Discounts By Small or Large Amounts
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The Psychology of
Pricing
A List of Tactics for Marketers and Retailers
Group Small Words Near a Price
Prices seem cheaper next to small-related words (e.g., low, tiny, little).
Customers group items that are close together.
It's called gestalt proximity.
And there's a fascinating implication: Perceiving items as a unit will merge their semantic traits. I call it convergent processing.
For example, an inline skate seemed cheaper when low friction appeared next to the price because this idea of lowness infused with the price. The skate seemed more expensive when the price was next to high performance (Coulter & Coulter, 2005).
Same with:
- Low Fat
- Low Risk
- Low Maintenance
Or be more direct. Why not say that your price is small? A small $5 fee seemed cheaper than a $5 fee (Rick et al., 2008).
Other examples of smallness:
- Only $39.99
- Just 3 payments of $29
- For a low price of $89.95
And skip big words. Perhaps the following coupon should emphasize pizza instead of large.
Of course, big words can help promotions (e.g., Prime Big Deal Day) when largeness is desired.
How to Apply
- Add a Visual Cue. Buy it now for only $199. In the previous sentence, bolding will encourage readers to group the price with this small word. You need this spatial grouping to trigger semantic convergence.
- Assign a Primitive Name to Pricing Plans. You might be tempted to choose a fancy name (e.g., premium, platinum) for SaaS plans. And sure, maybe you'll increase perceived value. But these names also feel more expensive. Try primitive names โ Starter, Basic, Essential โ to imply a small size and social norm. Customers buy cheaper plans when they see prestige names (e.g. Silver-Gold-Platinum; Wang et al., 2024).
- Coulter, K. S., & Coulter, R. A. (2005). Size does matter: The effects of magnitude representation congruency on price perceptions and purchase likelihood. Journal of Consumer Psychology, 15(1), 64-76.
- Rick, S. I., Cryder, C. E., & Loewenstein, G. (2008). Tightwads and spendthrifts. Journal of consumer research, 34(6), 767-782.
Make Sale Prices Look Different
A visual difference feels like a numerical difference.
Visual differences are meaningful.
Two prices feel numerically different when they look visually different: Hmm, this sale price feels different. Must be a great deal.
That's why infomercials show problems in grayscale, yet solutions in vibrant color. Viewers conflate this visual difference: Hmm, feels different. Guess it will make a big difference in my life.
Distinguish a Sale Price By:
- Color. Try a red price (Puccinelli et al., 2013).
- Digit Type. Customers prefer a discount from $48.63 to $39 because the digit type is changing from precise to round. And it's even stronger when you discount from round to precise (e.g., $49 to $38.63; Kim et al., 2023; Peev, & Mayer, 2017).
- Font Family. Ugly fonts can enhance good deals because customers spend more time and effort reading them, forcing them to notice the steep discount (Motyka et al., 2016).
- Font Size. Your price should be a smaller or larger font: Large fonts convey a good product, while small fonts convey a good deal (Aggarwal & Vaidyanathan, 2016; Bhattacharyya et al., 2023).
- Aggarwal, P., & Vaidyanathan, R. (2016). Is font size a big deal? A transactionโacquisition utility perspective on comparative price promotions. Journal of Consumer Marketing, 33(6), 408-416.
- Bhattacharyya, A., Jha, S., Guha, A., & Biswas, A. (2023). Should firms display the sale price using larger font?. Journal of Retailing, 99(1), 17-25.
- Coulter, K. S., & Coulter, R. A. (2005). Size does matter: The effects of magnitude representation congruency on price perceptions and purchase likelihood. Journal of Consumer Psychology, 15(1), 64-76.
- Kim, J., Jhang, J., Kim, S., & Stylidis, D. (2023). The impact of Price preciseness, Price reduction, and lay rationalism on travelersโ perceptions of deal attractiveness, purchase intention, and choice. Journal of Travel Research, 62(7), 1550-1568.
- Liang, S., Dong, X., Yan, Y., & Chang, Y. (2021). The influence of the inconsistent color presentation of the original price and sale price on purchase likelihood. Frontiers in Psychology, 12, 603754.
- Mead, J. A., & Hardesty, D. M. (2018). Price font disfluency: Anchoring effects on future price expectations. Journal of Retailing, 94(1), 102-112.
- Motyka, S., Suri, R., Grewal, D., & Kohli, C. (2016). Disfluent vs. fluent price offers: Paradoxical role of processing disfluency. Journal of the Academy of Marketing Science, 44, 627-638.
- Peev, P. P., & Mayer, J. M. (2017). Consumer perceptions of precise vs. just-below prices in retail settings. Journal of Promotion Management, 23(5), 673-688.
- Puccinelli, N. M., Chandrashekaran, R., Grewal, D., & Suri, R. (2013). Are men seduced by red? The effect of red versus black prices on price perceptions. Journal of Retailing, 89(2), 115-125.
- Shoham, M., Moldovan, S., & Steinhart, Y. (2018). Mind the gap: How smaller numerical differences can increase product attractiveness. Journal of Consumer Research, 45(4), 761-774.
Place Prices Toward the Left
Prices seem cheaper on the left.
Where should you place a price?
Try the left side.
Number lines begin with small numbers toward the left, connecting these two ideas of small and left in the brain (Cai et al., 2012).
Plus, mobile users need to cross over prices that are located toward the right:
Every fixation on the price will prompt them to reconsider and revalidate this purchase.
Finally, prices feel heavy toward the right because of a downward pulling motion:
...our eyes enter a visual field from the left, [so] the left naturally becomes the anchor point or โvisual fulcrum.โ Thus, the further an object is placed away from the left side (or the fulcrum), the heavier the perceived weight (Deng & Kahn, 2009, p. 9).
Try The Cliff Test to judge whether a price feels expensive:
- Center your price on a cliff
- If it falls, then it feels expensive
Alternatively, you can insert stimuli on the left to counterbalance the weight.
Caveats
- Place Buttons Toward the Right. Prices seem cheaper on the left, yet purchase buttons feel more clickable toward the right because most people are right-handed (Casasanto, 2009). And I've validated this effect in pilot surveys: Right-handers are more likely to click buttons on the right.
- Cai, F., Shen, H., & Hui, M. K. (2012). The effect of location on Price estimation: understanding numberโlocation and numberโorder associations. Journal of Marketing Research, 49(5), 718-724.
- Casasanto, D. (2009). Embodiment of abstract concepts: good and bad in right-and left- handers. Journal of Experimental Psychology: General, 138(3), 351.
- Deng, X., & Kahn, B. E. (2009). Is your product on the right side? The โlocation effectโ on perceived product heaviness and package evaluation. Journal of Marketing Research, 46(6), 725-738.
Show Two Multiples of a Price Nearby
Something will "feel right" about the price.
Nearby digits can impact prices.
For example, which ad is better:
- 4 small pizzas with unlimited toppings for $24
- 4 small pizzas with 6 toppings for $24
Customers prefer the second ad even though this deal is economically worse (King & Janiszewski, 2011).
Seeing two numbers (e.g., 4 and 6) will immediately activate the sum (e.g., 10) and product (e.g., 24; Baroody 1985). If a price matches these numbers, something just feels right
Insert different numbers near your price:
- $15: Get $5 off the next 3 days
- $120: Get 4 weekly 30-minute calls
- $500: Get 5 bonus PDFs for free ($100 Value)
Caveats
- Show Only Two Multiples. If your price is $12, don't show many multiples (e.g., 2, 3, 4, and 6). You need two digits (e.g., 4 and 6) in order to activate the sum (e.g., 10) or product (e.g., 24; Baroody 1985).
- Baroody, A. J. (1985). Mastery of basic number combinations: Internalization of relationships or facts?. Journal for Research in Mathematics Education, 16(2), 83-98.
- King, D., & Janiszewski, C. (2011). The sources and consequences of the fluent processing of numbers. Journal of Marketing Research, 48(2), 327-341.
Display Immediate Prices in Large Fonts
Large fonts appear closer, influencing customers to buy sooner.
Font size can influence prices.
In the past, I've suggested that prices feel cheaper in smaller fonts: Hmm, something about this price feels small. Must be cheap (Dehaene, 1992; Coulter & Coulter, 2005).
And I've seen A/B tests confirm this idea.
However, small fonts are difficult to implement in real-world settings because they degrade the user experience: It can feel like you're hiding these prices.
Even though large fonts can feel expensive, they can still work if you show an MSRP. In fact, a price can feel enticing when it's visually larger than an MSRP because this visual difference feels like a numerical difference: Hmm, this sale price feels different. Must be a great deal.
But what if you show a single price? Well, large fonts can also work for immediate decisions.
Zoomed-in images convert better for immediate decisions because customers imagine these decisions with a closer proximity โ as if they are physically closer (Ho et al., 2024).
Same with font sizes: Large fonts might convert better for immediate decisions because customers feel closer to these stimuli.
Use Big Fonts For
- Immediate Decisions. A typical SaaS plan.
- Urgent Appeals. Deal that expires in 24 hours.
Use Small Fonts For
- Luxury. Luxury brands are appealing because they feel distant and unattainable. Interestingly, customers preferred luxury items when standing further away from them (Chu et al., 2021).
- Price Sensitive Customers. Large fonts convey a good product, while small fonts convey a good deal (Aggarwal & Vaidyanathan, 2016)
Caveats
- More Research is Needed. In a pilot study, I found that respondents indicated they would buy a camera sooner if they saw a visually larger price and button. The difference was approaching significance, but not fully significant. Perhaps it's stronger with a more realistic purchase.
- Aggarwal, P., & Vaidyanathan, R. (2016). Is font size a big deal? A transactionโacquisition utility perspective on comparative price promotions. Journal of Consumer Marketing, 33(6), 408-416.
- Aleotti, S., Di Girolamo, F., Massaccesi, S., & Priftis, K. (2020). Numbers around Descartes: A preregistered study on the three-dimensional SNARC effect. Cognition, 195, 104111.
- Bhattacharyya, A., Jha, S., Guha, A., & Biswas, A. (2023). Should firms display the sale price using larger font?. Journal of Retailing, 99(1), 17-25.
- Chu, X. Y., Chang, C. T., & Lee, A. Y. (2021). Values created from far and near: Influence of spatial distance on brand evaluation. Journal of Marketing, 85(6), 162-175.
- Coulter, K. S., & Coulter, R. A. (2005). Size does matter: The effects of magnitude representation congruency on price perceptions and purchase likelihood. Journal of Consumer Psychology, 15(1), 64-76.
- Dehaene, S. (1992). Varieties of numerical abilities. Cognition, 44(1-2), 1-42.
- Ho, C. K., Kuan, K., Liang, S., & Ke, W. (2024). Effects of temporal features and product image zooming in online time scarcity deals: A construal fit account. Information & Management, 61(7), 104019.
Display Red Prices to Men
Men make decisions quickly, and they assume that red indicates savings.
What color should prices be?
Typically red, like this area:
Try a semi-saturated red that looks vivid, yet natural.
Stronger For
- Men. They assume that red indicates savings (Puccinelli et al., 2013, p. 121). But this effect has also been replicated with females and different cultures (Kim & Jang, 2022; Van Droogenbroeck et al., 2018)
Caveats
- Savings Can't Be Too Low. A red price worked for a 30% discount, but it decreased conversions for a 5% discount (Kim & Jang, 2022).
- All Prices Need to Be Red. Changing a single price in your assortment could backfire (Ye et al., 2020).
- Not Too Saturated. A saturated object looks bigger because attention is pulled toward it, and customers blame this heightened noticeability on its size: Well, it must be bigger (Hagtvedt & Brasel, 2017).
- Hagtvedt, H., & Brasel, S. A. (2017). Color saturation increases perceived product size. Journal of Consumer Research, 44(2), 396-413.
- Puccinelli, N. M., Chandrashekaran, R., Grewal, D., & Suri, R. (2013). Are men seduced by red? The effect of red versus black prices on price perceptions. Journal of Retailing, 89(2), 115-125.
- Kim, H., & Jang, J. M. (2022). Disadvantages of red: The color congruence effect in comparative price advertising. Frontiers in Psychology, 13, 1019163.
- Van Droogenbroeck, E., Van Hove, L., & Cordemans, S. (2018). Do red prices also work online?: An extension of Puccinelli et al.(2013). Color Research & Application, 43(1), 110- 113.
- Ye, H., Bhatt, S., Jeong, H., Zhang, J., & Suri, R. (2020). Red price? Red flag! Eye-tracking reveals how one red price can hurt a retailer. Psychology & Marketing, 37(7), 928-941.
Reduce the Size of Currency Symbols
Smaller symbols are less painful and easier to distinguish from the digits in a price.
Do you need a currency symbol?
Probably. These symbols convey that a number is a price.
But in some contexts, removing these symbols can boost purchases. An upscale restaurant in NY boosted their average order value by removing currency symbols from their menu (Yang et al., 2009).
Example in a restaurant near me:
Why It Works
- Less Pain. It feels like we're no longer spending cash. Plus, removing these symbols will reduce the amount of ink in your price โ less ink, less pain (Coulter & Coulter, 2005).
- Better UX. Currency symbols look like digits, forcing customers to disentangle them while comparing prices. Even if you don't remove these symbols, you might need to adjust their size, color, or position so that customers can easily distinguish them from remaining digits. Example from Walmart:
Caveats
- Depends on Font. Try fonts with greater distinction between digits and currency symbols, perhaps with more spacing or vertical slashes that extend fully through symbols. Here's $50 in a few common fonts:
- Coulter, K. S., & Coulter, R. A. (2005). Size does matter: The effects of magnitude representation congruency on price perceptions and purchase likelihood. Journal of Consumer Psychology, 15(1), 64-76.
- Yang, S. S., Kimes, S. E., & Sessarego, M. M. (2009). Menu price presentation influences on consumer purchase behavior in restaurants. International Journal of Hospitality Management, 28(1), 157-160.
Sort Prices From High to Low
Initial prices become a baseline for comparison, so the subsequent prices seem cheaper.
How should you arrange products?
Over an 8-week span, researchers alternated the sequence of beer prices on a menu. Revenue was highest with high-to-low sorting (Suk et al., 2012).
Why It Works
- Higher Reference Price. Customers who see a $9 beer evaluate other beers against this price.
- Loss Aversion. Customers who see a $4 beer then $5 beer are gradually losing the ability to pay a lower price. They feel pressured to pounce on a cheaper beer while they're still cheap. But a decreasing sequence has the reverse effect: Customers who see a $5 beer then $4 beer are losing quality, so they pounce on a quality option.
Caveats
- Left to Right. Numbers get larger as they move from left to right, so high-to-low sorting in horizontal layouts can feel manipulative. Instead, try distinguishing a higher price (e.g., different color) so that customers view this expensive option first, triggering the same effect as sorting.
- Suk, K., Lee, J., & Lichtenstein, D. R. (2012). The influence of price presentation order on consumer choice. Journal of Marketing Research, 49(5), 708-717.
Reframe Prices Into Smaller Base Values
A lower absolute digit is persuasive.
Customers focus on absolute numbers.
They often prefer $10/month to $120/year because a smaller base value feels more pleasing.
But it works for any lower base value.
Reframe a Price Into:
- Monthly Price. You'll often see yearly SaaS plans with a monthly framing ($25/month billed annually).
- Daily Price. Anything under $4.00/day is persuasive to mention (Gourville, 2003).
- Petty Expense. Like a cup of coffee (Gourville, 1999).
- Per User. Describe your $10k/month software as $67/user per month.
- Lower Currency. Global customers might be flexible on currency formats. If it makes sense, invoice them โฌ4,600 instead of an equivalent $5,000 (Wertenbroch et al., 2007).
- Incremental Cost. Consider a 23-inch TV for $199. If you want to sell the 27-inch TV for $259, don't sell the total price of $259. Sell the difference of $60. Researchers confirmed this effect for a premium subscription to the New York Times (e.g., +$7/month converted better than a total of $16/month; Allard et al., 2019).
Stronger For
- New Brands. Products without existing pricing norms (Chung & Sheinin, 2024).
- Typical Frames. Though let me know if you try $0.00003 per second.
- Round Digits. Customers preferred a gym membership in which โฌ60/month was framed as โฌ2/day or โฌ15/week; they disliked โฌ59/month as โฌ1.99/day or โฌ14.99/week (Bambauer-Sachse & Grewal, 2011).
- Allard, T., Hardisty, D. J., & Griffin, D. (2019). When โmoreโ seems like less: Differential price framing increases the choice share of higher-priced options. Journal of Marketing Research, 56(5), 826-841.
- Bambauer-Sachse, S., & Grewal, D. (2011). Temporal reframing of prices: when is it beneficial?. Journal of Retailing, 87(2), 156-165.
- Bambauer-Sachse, S., & Mangold, S. C. (2009). Are temporally reframed prices really advantageous? A more detailed look at the processes triggered by temporally reframed prices. Journal of Retailing and Consumer Services, 16(6), 451-457.
- Basu, S., & Ng, S. (2021). 100amonthor 1,200 a year? Regulatory focus and the evaluation of temporally framed attributes. Journal of Consumer Psychology, 31(2), 301-318.
- Chung, M., & Sheinin, D. A. (2024). The effect of categoryโspecific temporal frame on temporal reframing of price. Journal of Consumer Behaviour.
- Gourville, J. T. (1998). Pennies-a-day: The effect of temporal reframing on transaction evaluation. Journal of Consumer Research, 24(4), 395-408
- Gourville, J. T. (1999). The effect of implicit versus explicit comparisons on temporal pricing claims. Marketing Letters, 10(2), 113-124.
- Gourville, J. T. (2003). The effects of monetary magnitude and level of aggregation on the temporal framing of price. Marketing Letters, 14, 125-135.
- Wertenbroch, K., Soman, D., & Chattopadhyay, A. (2007). On the perceived value of money: The reference dependence of currency numerosity effects. Journal of Consumer Research, 34(1), 1-10.
Add Space Between Discounted Prices
A visual gap makes the numerical gap seem larger.
We imagine numbers along a horizontal ruler.
Therefore, add space between an original and sale price: Spatial distance feels like numerical distance (Coulter & Norberg, 2009).
Or add pseudo distance. Consider the Mueller-Lyer illusion in which a line seems longer when its edges are extended.
Digits can trigger this effect. For example, customers saw a greater distance between $7 to $5 when both digits faced outward (Coulter, 2007).
Example: Paragraph Text
While mentioning a discount, you could say: We're lowering our price from:
- $49 to $35
- $49 all the way to $35
The second version might be more enticing.
Example: Price Sliders
Customers might use a price slider to enter their own donation, auction bid, or bonus amount. If so, move the endpoint labels to the right of the slider to create more distance between the current price and highest endpoint.
Caveats
- Not Too Wide. Customers still need to group these two prices as a unit (DelVecchio et al., 2009).
- Must Be Horizontal. This effect didnโt manifest with vertical distance (Coulter & Norberg, 2009).
- Coulter, K. S. (2007). The effects of digitโdirection on eye movement bias and priceโrounding behavior. Journal of Product & Brand Management, 16(7), 501-508.
- Coulter, K. S., & Norberg, P. A. (2009). The effects of physical distance between regular and sale prices on numerical difference perceptions. Journal of Consumer Psychology, 19(2), 144-157.
- DelVecchio, D., Lakshmanan, A., & Krishnan, H. S. (2009). The effects of discount location and frame on consumersโ price estimates. Journal of Retailing, 85(3), 336-346.
Shrink the Symbolic Size of Payments
Help customers imagine "getting more" while "paying less."
Space can distort meaning.
For example, a list of benefits in a pricing plan can seem smaller (and less appealing) with a lot of empty space (Kwan et al., 2017).
But what if smallness is desired? Like pricing?
For example, you typically see two sections on a product page:
- What you get
- What you pay
Try shrinking the spatial width of payment sections so that customers feel like they're getting more while paying less.
Like Amazon pages:
After sharing this idea in my newsletter, I noticed that Walmart changed the layout of their product pages a few months later to apply this advice:
Why It Works
- Price Feels Smaller. Something about the payment feels smaller, and customers blame the price.
- Checkout Seems Easier. Same effect with the "amount" of effort โ less ink, less effort.
- Buttons Feel More Clickable Toward the Right. By shrinking the size of a payment section, you can push this interaction further toward the right side of the screen so that it feels more touchable and clickable for right-handers (who comprise most of the population). In a pilot study, I confirmed that right-handers prefer buttons on the right, while left-handers prefer buttons on the left.
How to Apply
- Categorize Layouts By Costs and Benefits. In their old page, Walmart included details about the product inside the payment section. But now there's a clearer distinction between what you get vs. what you pay.
- Shrink at Every Gestalt Level. Payment sections should consume less space in the layout, while prices should consume less space within its section of the layout.
- Don't Forget SaaS and Other Contexts. Perhaps you'll get more signups if your price consumes a smaller portion of height, leaving benefits to consume most of the space.
Place Discounts Next to Dissimilar Products
More customers buy the adjacent products if they don't compete.
Discounts capture attention.
And they push attention toward surrounding products.
Similar products seem worse compared to the discount, yet dissimilar products are less impacted because they don't compete. In fact, customers are more likely to buy these noncompeting products because their attention is now fixated in this area (Kan et al., 2023).
Imagine that you're discounting a regular yogurt.
Positioned toward the left? A competing yogurt on the right will seem worse.
However, a dissimilar greek yogurt would benefit on the right because (a) it doesn't compete with the discounted yogurt, and (b) the discount is pushing more attention toward it:
How to Apply
- Insert New Brands Next to Discounts. Most customers won't seek a new product (e.g., oat milk), so you need to grab their attention by placing it next to a sale item (e.g., regular milk) to penetrate their consideration set.
- Embrace Discounts From Noncompetitors. Even if street vendors aren't running a promotion, situating their cart next to a vendor that is running a promotion could boost sales due to heightened attention in this area. Especially if the food cuisines are different.
Caveats
- Don't Sacrifice Organization. Help customers find products they're seeking.
- Kan, C., Liu, Y. (Lucy), Lichtenstein, D. R., & Janiszewski, C. (2023). The Negative and Positive Consequences of Placing Nonpromoted Products Next to Promoted Products. Journal of Marketing, 0(0).
Reduce the Phonetic Size of Prices
Phonetic size feels like numerical size.
Prices can be spoken in different ways.
For example, $167 could be spoken as:
- One hundred and sixty seven dollars (10 syllables)
- One sixty seven (5 syllables)
Prices feel smaller in fewer syllables (Coulter et al., 2012).
In fact, every additional syllable decreases memory for a price by 20% (Vanhuele et al., 2006; Luna & Kim, 2009)
Therefore, try shrinking the phonetic size of your price:
...the auto salesperson might refer to his own brand's price in hundred-product terms, but the competitor's brand in thousand-sum terms (perhaps even including the exact cents amount to further increase magnitude perceptions; Coulter et al., 2012, p. 403)
Commas
Remove commas to reduce the phonetic size:
- $1,625: One thousand six hundred and twenty five (10 syllables)
- $1625: Sixteen twenty five (5 syllables)
Or try a decimal abbreviation:
- $1500: fifteen hundred dollars (6 syllables)
- $1.5k: one point five kay (4 syllables)
Cents
Should you remove cents from prices, like $28.16?
Not always. Cents can be effective because precise numbers feel smaller (Thomas et al., 2010).
So it depends on the medium:
- Add cents in written prices to increase precision.
- Remove cents in spoken prices to reduce the phonetic size.
Phonemes
Certain sounds can feel smaller or larger. For example, vowels can be front or back based on the location of the tongue.
- Front Vowels: bee, bit, bait
- Back Vowels: boot, but, brought
These vowels are found in digits:
- Front Vowels: 3, 5, 6, 7, 8, 9
- Back Vowels: 1, 2, 4
In the sensory world, high-pitched sounds are produced by small objects. Thanks to this recurring experience, a price like $35 feels smaller when spoken or heard because these phonemes produce a high-pitched sound that activates the idea of a small object (Coulter & Coulter, 2010; Klink, 2000).
Parentheses
As you read this sentence, you're speaking these words inside your head because of inner speech.
Research shows that inner speech adapts to any vocal traits that are implied in writing (e.g., tone, accent, speed; Yao & Scheepers, 2015).
For example, if you see an exclamation point in a purchase button, your brain will shout "Buy Now!" with an excited tone. But nobody feels genuinely excited during an ordinary purchase, so this syntax will likely reduce sales because something will feel wrong.
However, parentheses can trigger the opposite effect: Prices that are enclosed in parentheses will be internally spoken in quieter tones that imply less importance, size, or relevance. Try adding them whenever it makes sense (e.g., list of add-on prices).
Stronger For
- Auditory Cues. Even if customers read silently, their brain still encodes phonetic versions of prices. But this effect is stronger if customers speak these prices aloud or speak them in their mind.
- Coulter, K. S., Choi, P., & Monroe, K. B. (2012). Comma Nโcents in pricing: The effects of auditory representation encoding on price magnitude perceptions. Journal of Consumer Psychology, 22(3), 395-407.
- Coulter, K. S., & Coulter, R. A. (2010). Small sounds, big deals: Phonetic symbolism effects in pricing. Journal of Consumer Research, 37(2), 315-328.
- Dehaene, S. (1992). Varieties of numerical abilities. Cognition, 44(1-2), 1-42.
- Klink, R. R. (2000). Creating brand names with meaning: The use of sound symbolism. Marketing letters, 11, 5-20.
- Luna, D., & Kim, H. M. C. (2009). How much was your shopping basket? Working memory processes in total basket price estimation. Journal of Consumer Psychology, 19(3), 346-355.\
- Thomas, M., Simon, D. H., & Kadiyali, V. (2010). The price precision effect: Evidence from laboratory and market data. Marketing Science, 29(1), 175-190.
- Vanhuele, M., Laurent, G., & Dreze, X. (2006). Consumers' immediate memory for prices. Journal of Consumer Research, 33(2), 163-172.
- Yao, B., & Scheepers, C. (2015). Inner voice experiences during processing of direct and indirect speech. Explicit and implicit prosody in sentence processing: Studies in honor of Janet Dean Fodor, 287-307.
Insert Alliteration into Prices
Customers were more likely to buy two t-shirts for $25 because of the matching โtโ sounds.
Alliteration feels good.
Consider the name Coca-Cola.
Reading Coca activates a "c" sound in our brain. Re-encountering this sound in Cola feels easy because of the existing activation of this sound, and we attribute this pleasant sensation to the entity (in this case, Coca-Cola).
You also see this strategy with pricing:
- Five Dollar Footlong (Subway)
- Four for $4 (Wendy's)
- Ten for $10 (Kroger)
Indeed, it works:
- A $6.00 sundae converted better than a $5.99 sundae
- Four Flavors $4.00 converted better than Four Scoops $3.99.
- Two Twix converted better than Two Snickers.
- 4 Fables $40 converted better than 4 Threybles $39.
- 9 Neven for $9.00 converted better than 9 Neven for $8.00
(see Davis et al. 2016)
- Davis, D. F., Bagchi, R., & Block, L. G. (2016). Alliteration alters: Phonetic overlap in promotional messages influences evaluations and choice. Journal of Retailing, 92(1), 1-12.
Align Product Type With Digit Type
Adjectives that describe your product should also describe your price.
Think of your product.
Perhaps it could be described as:
- Sharp
- Unique
- Precise
Well, those descriptions can also apply to digits. Strive for congruence when possible: Adjectives that describe your product should also describe your price.
Why It Works
- Congruence. Buying tickets to a concert? Since you want an emotional experience, you prefer discounts that are emotional (e.g., chance to win free tickets) because of this congruence (Chandon et al., 2000). Digits are merely a different medium to reach this alignment.
- Scaffolding of the Mind. All abstract ideas are built from primitive ideas that we learned early in life โ e.g., spatial distance helped us learn numerical distance. These primitive ideas can add neural connections between two seemingly different domains (e.g., products and digits).
How to Apply
- Charge Round Prices For Round Products. In a pilot study, I alternated $9.37 and $10 for a knife and hammer. Participants significantly preferred $10 for hammer even though $9.37 was cheaper.
- Charge Round Prices for Networking Events. Customers who want social connectivity will prefer numerical connectivity (e.g., $50 is connected to many numbers). For example, participants were asked to rate the loneliness of each number from 1 to 100, and they attributed more loneliness to prime numbers that couldn't be divided. Same with prices: While comparing $19 and $21, lonely participants were less deterred by $21 because of its connections to 3 and 7 (Yan & Sengupta, 2021).
- Vary Your Digits to Convey Variety. Product variety seems higher when customers are exposed to more visual diversity (e.g., random shapes, types of people in ads; Khan et al., 2024). And I confirmed this effect in a pilot study: Repeating digits in a price reduced the perceived variety in a box of chocolates because people expected more repetition in the box.
- Charge Precise Prices For Analytical Tools. Customers preferred a calculator with a precise price of $39.72 or $40.29 (vs. $40; Wadhwa & Zhang, 2015). Though one study failed to replicate this effect (Harms et al., 2018). And I couldn't replicate a similar approach. I asked respondents to rate the accuracy of a kitchen scale, and I altered the precision of the price ($18, $19.73, $20, $21.73). But these varying levels of precision didn't influence the perceived accuracy of the scale.
- Charge Paired Digits For Paired Products. Would $7.88 convert better for a pair of socks? Similar effects happen with colors: Lonely customers prefer two colors that look similar because this visual companionship feels like social companionship (Kwon et al., 2024). Or maybe 88 can "feel right" for socks because the visual roundness resembles the shape of a sock. Perhaps 7 or 9 could deter customers because each digit has a visually sharp endpoint at the bottom.
- Charge Lucky Digits For Lucky Products. Prices in Singapore convert better with 8 because it's a lucky number (Westjohn et al., 2017). Perhaps this idea can explain why Western marketers love 7-ending prices. Or perhaps 7-ending prices convert better for products that require luck (e.g., lottery tickets, mystery boxes, trading cards).
Caveats
- More Research is Needed. This fundamental idea is widely supported, but the individual pricing applications need more empirical validation. I've been conducting a few pilot studies to test some of these effects, and I'll update this tactic with any successes or failures.
- Semantics vs. Visuals. Respondents preferred $10 for a hammer, but I'm not sure if this preference was due to shared roundness in the semantic idea or visual roundness of 0.
- Chandon, P., Wansink, B., & Laurent, G. (2000). A benefit congruency framework of sales promotion effectiveness. Journal of marketing, 64(4), 65-81.
- Khan, U., Kim, S., Choi, S., & Labroo, A. (2024). Diversity Representations in Advertising: Enhancing Variety Perceptions and Brand Outcomes. Journal of Consumer Research, ucae060.
- Kwon, M., Jeon, E., & Han, Y. (2024). The social side of color: How social exclusion influences preferences for color combination. Psychology & Marketing.
- Schumacher, A., Goukens, C., Geyskens, K., & Nielsen, J. H. (2024). Revisiting surprise appeals: How surprise labeling curtails consumption. Journal of Consumer Psychology.
- Wadhwa, M., & Zhang, K. (2015). This number just feels right: The impact of roundedness of price numbers on product evaluations. Journal of Consumer Research, 41(5), 1172-1185.
- Wang, Y., Jiang, J., & Yang, Y. (2023). Magic odd numbers: The effect of numerical parity on variety-seeking. Journal of Retailing and Consumer Services, 73, 103345.
- Westjohn, S. A., Roschk, H., & Magnusson, P. (2017). Eastern versus western culture pricing strategy: Superstition, lucky numbers, and localization. Journal of International Marketing, 25(1), 72-90.
- Yan, D., & Sengupta, J. (2021). The effects of numerical divisibility on loneliness perceptions and consumer preferences. Journal of Consumer Research, 47(5), 755-771.
Reduce the Left Digit By One
Use just-below prices (e.g., $2.99, $49.95) to reduce the left digit as much as possible.
Should you charge just-below prices, like $9.99 or $19.95?
These prices are everywhere. Sometimes even in calories (e.g., 199 calories; Choi et al., 2019).
Does this strategy really work?
It does, based on a meta-analysis with 40k participants (Troll et al., 2023).
Why It Works
- Anchoring on Left Digit. A one-cent difference between $2.99 and $3.00 can feel like a one-dollar difference because your eyes get anchored on the 2: "while evaluating โ'2.99,' the magnitude encoding process starts as soon as our eyes encounter the digit '2.' Consequently, the encoded magnitude of $2.99 gets anchored on the leftmost digit (i.e., $2) and becomes significantly lower than the encoded magnitude of $3.00" (Thomas & Morwitz, 2005, p. 55).
- Budget Tallies. Researchers asked people to buy products under a $73 budget. Participants believed they could buy significantly more items with just-below prices because they kept tallying the first digits instead of the rounded price (Bizer & Schindler, 2005).
Stronger For
- Small Left Digits. $199 is more effective than $799. Moving from 1 to 2 is a 100% increase, while moving from 7 to 8 is only a 14% increase; Lin & Wang, 2017).
- Visible Prices. Customers need to see the anchor. Effects diminish if $199 is heard or recalled (Sokolova et al., 2020).
- New Brands. Without familiarity, customers assume that $199 is discounted (Anderson & Simester, 2003).
- Young and Affluent. Or anyone who is price-conscious and deciding quickly (Gaston-Breton, 2011).
Caveats
- Just-Below Prices Aren't Actually Lower. Ironically, just below prices are typically higher than average โ based on 8 years of scanner data and 98 million transactions; Snir & Levy, 2021).
- Inferior Quality. You probably don't want to charge $19,999 for a medical procedure. Though a large meta-analysis couldn't find any degradations in quality from just-below prices (Troll et al., 2023). Another study found that customers have gradually stopped using price to infer quality across the years from 1989 to 2006 (Vรถlckner & Hofmann, 2007).
- Depends on Math Skills. Customers who are skilled with numbers encode $2.99 as $3.00.
...if the average WTP was determined to be around 18 dollars, less numerate consumers would respond most favorably to $18.99, while highly numerate consumers would respond most favorably to $17.99 (Hodges & Chen, 2022)
- Anderson, E. T., & Simester, D. I. (2003). Effects of $9 price endings on retail sales: Evidence from field experiments. Quantitative marketing and Economics, 1, 93-110.
- Bizer, G. Y., & Schindler, R. M. (2005). Direct evidence of endingโdigit dropโoff in price information processing. Psychology & Marketing, 22(10), 771-783.
- Choi, J., Jessica Li, Y., & Samper, A. (2019). The influence of health motivation and calorie ending on preferences for indulgent foods. Journal of Consumer Research, 46(3), 606-619.
- Gaston-Breton, C. (2011). Consumer Preferences for 99-ending prices: the mediating role of price consciousness. In Business Economic Series (Vol. 3, pp. 1-39).
- Hodges, B. T., & Chen, H. (2022). In the eye of the beholder: The interplay of numeracy and fluency in consumer response to 99-Ending prices. Journal of Consumer Research, 48(6), 1050-1072.
- Lin, C. H., & Wang, J. W. (2017). Distortion of price discount perceptions through the left-digit effect. Marketing Letters, 28, 99-112.
- Manning, K. C., & Sprott, D. E. (2009). Price endings, left-digit effects, and choice. Journal of Consumer Research, 36(2), 328-335.
- Schindler, R. M., & Chandrashekaran, R. (2004). Influence of price endings on price recall: a byโdigit analysis. Journal of Product & Brand Management, 13(7), 514-524.
- Schindler, R. M., & Kirby, P. N. (1997). Patterns of rightmost digits used in advertised prices: implications for nine-ending effects. Journal of Consumer Research, 24(2), 192-201.
- Snir, A., & Levy, D. (2021). If you think 9-ending prices are low, think again. Journal of the Association for Consumer Research, 6(1), 33-47.
- Sokolova, T., Seenivasan, S., & Thomas, M. (2020). The left-digit bias: when and why are consumers penny wise and pound foolish?. Journal of Marketing Research, 57(4), 771-788.
- Thomas, M., & Morwitz, V. (2005). Penny wise and pound foolish: the left-digit effect in price cognition. Journal of Consumer Research, 32(1), 54-64.
- Troll, E. S., Frankenbach, J., Friese, M., & Loschelder, D. D (2023). A metaโanalysis on the effects of justโbelow versus round prices. Journal of Consumer Psychology.
- Vรถlckner, F., & Hofmann, J. (2007). The price-perceived quality relationship: A meta-analytic review and assessment of its determinants. Marketing letters, 18, 181-196.
Repeat Digits to Grab Attention
Similar items pull more attention.
Do you need to push attention toward your product?
Perhaps you need customers to look at your product in a 3rd party site (e.g., Amazon, eBay, Etsy).
In this scenario, try repeating digits (e.g., $2111).
Humans group items that look similar:
It's called gestalt similarity. And it pulls attention.
In heatmap studies, repeated digits (e.g., 8999) received more attention than unique digits (e.g., 6875; Dogerlioglu-Demir et al., 2022).
Repeat digits in prices, ratings, dates, SKUs, or any item that requires more attention.
Stronger For
- High Competition. Don't repeat digits on your own website. You want attention on benefits, not costs.
- Good Deals. Try discounting $4.44 to $3.33. Your discount will be lower across every digit, and both clusters will grab more attention in a catalog or store aisle.
- Dogerlioglu-Demir, K., Akpinar, E., Gurhan-Canli, Z., & Koรงaล, C. (2022). Are 1-endings the new 9-endings? An alternative for generating price discount perceptions. Journal of Retailing and Consumer Services, 66, 102912.
Ease Comparisons of Your Price
Prices are compared to past prices, competitors, and adjacent numbers.
How do customers evaluate prices?
They use reference prices (see Mazumdar et al., 2005).
Imagine a carton of eggs for $5.00.
Is $5.00 a good deal? How can you tell? What happens in your brain?
You compare $5.00 to a variety of numbers:
- Past Prices. You paid $4.50 last time.
- Advertised Prices. A flyer said $3.49.
- Estimated Prices. You expected $4.00.
- Competitor Prices. Other eggs are $2.99.
- Ideal Price. You'd like to pay $3.50.
- Maximum Price: You won't pay more than $5.50.
- Nearby Numbers. You read 100% Organic.
And other numbers (see Lowengart, 2002)
You merge those sizes into a single magnitude, say $4.00, then compare this magnitude to the base price of $5.00.
Hmm, in this case, you'd need to pay more.
But that's okay. If this difference still feels reasonable, you'll buy the eggs and feel a slight twinge of pain that reduces your spending in the remaining shopping trip.
How to Apply
- Compare Yearly Prices When You're Cheaper. Customers are biased toward absolute numbers: The relative difference between 5 and 9 feels smaller than 500 and 900 (Pandelaere et al., 2011). Therefore, don't compare your $5/month plan to a $9/month alternative. Compare the yearly differences at $60/year and $108/year. The absolute difference is now $48 instead $4.
- Compare All Your Prices to Competitors, or No Prices. Selective comparisons feel suspicious. Any price without a comparison is assumed to be higher (Barone et al., 2004).
- Name Competitors in Comparisons. "Seen Elsewhere for $50" feels suspicious (Krishnan et al., 2006).
- Bundle When Competitors Are Cheaper. Prevent a direct comparison (Balachander et al., 2010).
- Place Your Price Underneath Competitors. You'll benefit either way: You'll ease subtraction when cheaper, yet hinder subtraction when more expensive (Guha et al., 2018).
- Balachander, S., Ghosh, B., & Stock, A. (2010). Why bundle discounts can be a profitable alternative to competing on price promotions. Marketing Science, 29(4), 624-638.
- Barone, M. J., Manning, K. C., & Miniard, P. W. (2004). Consumer response to retailersโ use of partially comparative pricing. Journal of Marketing, 68(3), 37-47.
- Briesch, R. A., Krishnamurthi, L., Mazumdar, T., & Raj, S. P. (1997). A comparative analysis of reference price models. Journal of Consumer Research, 24(2), 202-214.
- Grewal, D., Marmorstein, H., & Sharma, A. (1996). Communicating price information through semantic cues: the moderating effects of situation and discount size. Journal of Consumer research, 23(2), 148-155.
- Grewal, D., Roggeveen, A. L., & Lindsey-Mullikin, J. (2014). The contingent effects of semantic price cues. Journal of Retailing, 90(2), 198-205.
- Krishnan, B. C., Biswas, A., & Netemeyer, R. G. (2006). Semantic cues in reference price advertisements: The moderating role of cue concreteness. Journal of Retailing, 82(2), 95-104.
- Lowengart, O. (2002). Reference price conceptualisations: An integrative framework of analysis. Journal of Marketing Management, 18(1-2), 145-171.
- Mazumdar, T., Raj, S. P., & Sinha, I. (2005). Reference price research: Review and propositions. Journal of marketing, 69(4), 84-102.
- Pandelaere, M., Briers, B., & Lembregts, C. (2011). How to make a 29% increase look bigger: The unit effect in option comparisons. Journal of Consumer Research, 38(2), 308-322.
Add an Expensive Product to Catalogs
Raise the highest price in your range so that existing prices seem cheaper.
Every price is relative.
Customers evaluate the size of prices by comparing them to a visible range (Janiszewski & Lichtenstein, 1999).
For example, a $10 gadget can be viewed differently:
- Cheap in a range from $8 to $15
- Meh in a range from $5 to $15
- Expensive in a range from $5 to $12
Same price. Different perceptions.
Can't lower your price? Try raising the highest pice in your range.
Customers prefer:
- A $50 ribeye near a $200 wine
- A $200 projector near a $5,000 projector
- A $5,000 proposal near a $25,000 proposal
In a catalog of 8 cameras from $50โ$75, customers were willing to spend more when they saw a $600 camera (Krishna et al., 2006).
Requirement: Multiple Products
Be careful if you sell variations of a single product (e.g., SaaS plans).
Customers engage in two types of processing:
- Discrimination - Evaluating the differences among objects
- Generalization - Evaluating a summarized view of objects
Oftentimes, a single product triggers generalization.
Why does that matter? Because it reverses the recommendation. Raising the highest pice would backfire for customers with a summarized view because the average price would now be higher (Cunha Jr & Shulman, 2011).
Adapt your approach based on this mindset:
- Discrimination? Raise the endpoints of your prices (e.g., raise bottom, raise top)
- Generalization? Lower the mean of your prices (e.g., lower bottom, add cheaper items).
How to Apply
- Delay Expensive Products for New Customers. Existing customers should prefer a $65 shirt near a $300 shirt. But new customers will be assessing your overall store image upon their first exposure. In this summary mindset, a $300 shirt would make all prices (including a $65 shirt) seem more expensive.
- Add a Small or Free SaaS Tier. Software is usually a single platform (thus a summary mindset). Try lowering the mean of your prices by adding a cheap plan so that all plans seem cheaper.
- Raise the Upper Limit of Price Sliders. You might provide a UI slider for customers to choose their price (e.g., donation, bonus, auction bid). With a range from $0 to $1,000, the midpoint is $500. But if you raise the upper limit to $2,000, the midpoint (and inferred social norm) is now $1,000 (Thomas & Kyung, 2019).
Related Applications
- Expand Ranked Lists. Are you ranked #2 in your Top 5 competitors? Well, why not include 50 competitors? Or 100 competitors? You just moved from the top 40% to the top 2% without any effort (Xie et al., 2024).
- Cunha Jr, M., & Shulman, J. D. (2011). Assimilation and contrast in price evaluations. Journal of Consumer Research, 37(5), 822-835.
- Janiszewski, C., & Lichtenstein, D. R. (1999). A range theory account of price perception. Journal of consumer Research, 25(4), 353-368.
- Krishna, A., Wagner, M., Yoon, C., & Adaval, R. (2006). Effects of extreme-priced products on consumer reservation prices. Journal of Consumer Psychology, 16(2), 176-190.
- Thomas, M., & Kyung, E. J. (2019). Slider scale or text box: how response format shapes responses. Journal of Consumer Research, 45(6), 1274-1293.
- Xie, V., Cai, F., & Bagchi, R. (2024). EXPRESS: The Rank Length Effect. Journal of Marketing Research, 00222437241268439.
Describe Your Product Before the Price
Emphasize the benefits. Not costs.
Which should you show first: product or price?
It depends:
- Selling high quality? Describe products before prices. Based on brain scans, customers are less impacted by price because they're fixated on benefits (Karmarkar et al., 2015).
- Selling low cost? Show prices first. Customers will fixate on this price while evaluating the product, which helps them see the economic value.
Still not sure? In default scenarios, describe benefits then prices.
Skilled negotiators frame their offers as gains (Majer et al., 2020).
- Gain: I give my A for your B.
- Loss: I request your B for my A.
Same with pricing:
- Gain: I give a logo for $2k.
- Loss: I request $2k to give a logo.
Customers in the second frame evaluate the offer by fixating on their loss of $2k.
- Karmarkar, U. R., Shiv, B., & Knutson, B. (2015). Cost conscious? The neural and behavioral impact of price primacy on decision making. Journal of Marketing Research, 52(4), 467- 481.
- Majer, J. M., Trรถtschel, R., Galinsky, A. D., & Loschelder, D. (2020). Open to offers, but resisting requests: How the framing of anchors affects motivation and negotiated outcomes. Journal of personality and social psychology, 119(3), 582.
Charge Divisible Prices in Bulk Bundles
Customers imagine each item as a discrete unit.
Consider a 3-pack of candles for $15.
Each candle would cost $5. Pretty good, right?
If you lower the bundle price to $14.50, now each candle would cost $4.83. But ironically, this cheaper price is less appealing because it lacks divisibility.
Customers preferred:
- 4-pack of body wash for $16 (vs. $15.30)
- 6-pack of tissues for $18 (vs. $17)
- 8-pack of toothbrushes for $16 (vs. $15.41)
- 11-pack of cashews for $11 (vs. $10)
(see Park et al., 2023).
Why It Works
- Easier to Imagine Usage. In a 3-pack of candles for $15, customers can easily calculate $5 per candle. This calculation shifts their attention from the bundle to the units. Customers imagine the candles as discrete items, easing their ability to imagine usage scenarios (e.g., one for the living room, one for the bathroom, one for the bedroom).
How to Apply
- Adjust Prices or Quantities. Whichever can help you reach divisibility.
- Multiples Can Work Too. Like 4 small pizzas with 6 toppings for $24 (King, & Janiszewski, 2011).
- Charm Prices Might Work Too. Instead of $15.00, try $14.99. Customers might round up to $15 for divisibility, yet $14 would anchor a lower price for the bundle.
- Park, H., Kwon, J., & Bagchi, R. (2023). Is โ4 for 16โ Better Thanโ4 for 15.30โ? The Price Divisibility Effect in Multipack Purchases. Journal of Consumer Research, ucad071.
- King, D., & Janiszewski, C. (2011). The sources and consequences of the fluent processing of numbers. Journal of Marketing Research, 48(2), 327-341.
Discount High Prices By Amount Off
Choose whichever framing (percent or amount) is a higher digit.
Should you discount by percentage or amount?
It depends. Customers prefer whichever digit is higher:
...a $1,000 discount on a $20,000 automobile appears significant in terms of dollar savings, but the equivalent 5% discount seems less attractive. On the other hand, a 50% price reduction on a $0.50 can of cola appears attractive in terms of percentage amounts, but the real monetary savings of $0.25 does not appear to be significant (Chen et al., 1998, p. 356)
(see also Gonzรกlez et al., 2016)
Use $100 as a baseline:
- Under $100? Discount by percent.
- Over $100? Discount by amount.
In both cases, you'll show the higher digit:
- $50 blender: 20% off seems better than $10 off
- $150 blender: 20% seems worse than $30 off
Caveats: Discount By Amount For
- Everyday Items. Grocery prices are highly accessible, so customers rely on absolute differences (Yan, 2019).
- Low Power Customers. They're skeptical of percentages (Choi & Mattila, 2014).
Caveats: Discount By Percent For
- Very High Prices. $500 off can remind customers that they are spending a lot of money.
- Chen, S. F. S., Monroe, K. B., & Lou, Y. C. (1998). The effects of framing price promotion messages on consumers' perceptions and purchase intentions. Journal of retailing, 74(3), 353-372.
- Choi, C., & S. Mattila, A. (2014). The effects of promotion framing on consumers' price perceptions: The moderating role of a personal sense of power. Journal of Service Management, 25(1), 149-160.
- DelVecchio, D., Krishnan, H. S., & Smith, D. C. (2007). Cents or percent? The effects of promotion framing on price expectations and choice. Journal of marketing, 71(3), 158-170.
- Gonzรกlez, E. M., Esteva, E., Roggeveen, A. L., & Grewal, D. (2016). Amount off versus percentage offโwhen does it matter?. Journal of Business Research, 69(3), 1022-1027.
- Guha, A., Biswas, A., Grewal, D., Verma, S., Banerjee, S., & Nordfรคlt, J. (2018). Reframing the discount as a comparison against the sale price: does it make the discount more attractive?. Journal of Marketing Research, 55(3), 339-351.
- Kim, H. M., & Kramer, T. (2006). โPay 80%โ versus โget 20% offโ: The effect of novel discount presentation on consumersโ deal perceptions. Marketing Letters, 17, 311-321.
- Yan, D. (2019). Subtraction or division: Evaluability moderates reliance on absolute differences versus relative differences in numerical comparisons. Journal of Consumer Research, 45(5), 1103-1116.
Separate Your Discounts When Possible
All else equal, customers prefer coupons to visibly reduced prices.
Consider a $10 discount.
Marketers could show a discounted price:
Or they could supply coupons. In this case, customers would see current prices until they apply this discount in the checkout:
Would it matter? Itโs still $10 off either way.
Turns out, yes. Coupons induce larger purchases (Jia et al., 2023).
With a coupon, customers browse products by fixating on the reduction โ not the final price โ and this pleasant sensation numbs the pain of a larger purchase. For discounts that are visibly shown, prices are already reduced without any wiggle room to reduce further. So customers prefer cheaper options.
How to Apply
- Give Coupon. All else equal, they're superior to visible discounts.
- Delay Showing Discounted Prices. Consider a 15% discount. Marketers will be tempted to apply this discount immediately in order to show the lowest price possible. But if customers are aware of this discount while browsing, wait until the checkout to show the final reduction. Let customers envision price flexibility while browsing.
- Jia, H., Huang, Y., Zhang, Q., Shi, Z., & Zhang, K. (2023). Final Price Neglect in Multi-Product Promotions: How Non-Integrated Price Reductions Promote Higher-Priced Products. Journal of Consumer Research, ucad045.
Give Round or Precise Discounts
Round percentages seem big, while decimal percentages seem urgent.
Which discount is better: 24.7% or 25%?
It depends.
Round numbers can feel larger: A drink was more energizing with 100mg of caffeine (vs. 102mg; Pena-Marin & Bhargave, 2016; Thomas et al., 2010).
However, precise numbers feel unstable. You imagine 24.7 on narrow scale in which any movement โ even a slight nudge โ can change this number.
Subconsciously, 24.7% can easily change. Perhaps even disappear. Therefore, customers feel motivated to grab this discount while it's still available. Indeed, customers were motivated by a 6.8% (vs. 7%) discount because they believed it would end sooner (Jha et al., 2023).
How to Apply
- Commit to One Side. Your discount should be 7.7% or 10%. Not 8%.
- Adjust Discounts for Segments. Are customers motivated by price? Give 25% off. Urgency? Give 24.7% off.
- Add Decimals to Long-Term Discounts. 16.2% off can imply urgency even if there's no deadline.
- Pena-Marin, J., & Bhargave, R. (2016). Lasting performance: Round numbers activate associations of stability and increase perceived length of product benefits. Journal of Consumer Psychology, 26(3), 410-416.
- Thomas, M., Simon, D. H., & Kadiyali, V. (2010). The price precision effect: Evidence from laboratory and market data. Marketing Science, 29(1), 175-190.
- Jha, S., Biswas, A., Guha, A., & Gauri, D. (2023) Can rounding up price discounts reduce sales?. Journal of Consumer Psychology.
Let Customers Win Their Discount
Gamified discounts are consistently effective.
Should you gamify discounts?
Jordan's Furniture is a retailer near Boston, and occasionally they give away furniture for free depending on certain outcomes:
Buy anything โฆ ANYTHING โฆ at Jordanโs Furniture starting today and it could all be FREE if the Red Sox pitch a perfect game between July 19 and September 29 (Reidy, 2013)
Other gamified outcomes:
- Sports team remains undefeated
- Certain movie wins an Oscar
- Every 50th purchase
Do these promotions work? Indeed they do.
For example, a grocery store in the US tested two promotions:
- 1% off
- 1% chance itโs free
Both discounts were equal, yet customers spent 54% more with the gamified discount (Lee et al., 2019).
And it's been replicated. Many times.
Researchers bought a vending machine that sold $0.75 candies (e.g., Snickers, Twix, Starburst).
They ran two discounts:
- Pay $0.50 instead of $0.75
- Pay $0.75, but a 33% chance to get it free
The uncertain discount boosted sales by 50% (Mazar et al., 2017).
Customers also spent more on digital courses:
- Pay $15 for any course
- Choose one of three doors (all showed $15 off)
And fast food:
- Pay 1.50โฌ instead of 2โฌ
- 50% chance to pay 1โฌ instead of 2โฌ
(see Alavi et al., 2015; Hock et al., 2020).
In fact, you can even lower the discount.
Participants received a scratch ticket that revealed a discount for 0%, 10%, 20%, or 30% off.
The top performers? Any discount that was won.
A lucky 10% discount sold more merchandise than a guaranteed 20% discount (Hock et al., 2020).
Stronger For
- Price-Sensitive Customers. But gamified discounts can still work for expensive products (e.g., hotel rooms; Choi & Kim, 2007; Mazar et al., 2017).
Related Applications
- Randomize Which Products to Discount. Participants were 67% more likely to click a link to buy caramel chocolate on Amazon when this flavor was chosen to be discounted by a random number generator (Fulmer & Reich, 2024).
- Alavi, S., Bornemann, T., & Wieseke, J. (2015). Gambled price discounts: a remedy to the negative side effects of regular price discounts. Journal of Marketing, 79(2), 62-78.
- Choi, S., & Kim, M. (2007). The effectiveness of โscratch and saveโ promotions: The moderating roles of price consciousness and expected savings. Journal of Product & Brand Management, 16(7), 469-480.
- Fulmer, A. G., & Reich, T. (2024) Promoting a product without increasing the promotion budget: How chance in promotions can heighten consumer demand. Journal of Consumer Psychology.
- Hock, S. J., Bagchi, R., & Anderson, T. M. (2020). Promotional games increase consumer conversion rates and spending. Journal of Consumer Research, 47(1), 79-99.
- Lee, C. Y., Morewedge, C. K., Hochman, G., & Ariely, D. (2019). Small probabilistic discounts stimulate spending: Pain of paying in price promotions. Journal of the Association for Consumer Research, 4(2), 160-171.
- Mazar, N., Shampanier, K., & Ariely, D. (2017). When retailing and Las Vegas meet: Probabilistic free price promotions. Management Science, 63(1), 250-266.
- Reidy, C. (2013, April 3). Pedro Martinez pitches perfect game promotion for Jordanโs Furniture. Boston.com. https://www.boston.com/uncategorized/noprimarytagmatch/2013/04/03/pedro-martinez-pitches-perfect-game-promotion-for-jordans-furniture