In this complicated economy we are currently in, within the fierce competition contains intense pricing battles, battles that often involve the use of strategic planning and of a particular pricing strategy – e.g. psychological pricing.
All pricing strategies come with advantages and disadvantages, likewise nothing is perfect. Described below will be some of the major pros and cons of utilizing psychological pricing.
Let’s begin with the cons first, shall we? Consider the meaning behind psychological pricing, it aims to play “tricks” on the minds of human beings, to trick us into believing something which is not equivalent to its true self. The single word is perception.
By exploiting psychology, marketers are creating a different perception of something to us, therefore what we think it is, is what we believe. The downside of this is… as a typical consumer who may possibly fall for this pricing strategy, may no sooner realize they were tricked, and so, they will not re-purchase that particular deal anymore.
What can be learned from this is that all pricing strategies must be planned carefully to prevent crossing the line that may cause side-effects.
Another downside of using the concept of psychological pricing is that you are not alone, you are simply not the first one to use this tactic in the economy. The fact is when everyone else in your competition is using the same trick you are, it’s basically communism. The trick will be degraded because the majority is doing the exact same thing.
From this, understand that you must stand out from the crowd and crave up some originality in your pricing campaigns, be unique.
Everything in the world has downsides and upsides. Not only is utilizing a pricing strategy obviously going to increase your sales and bring in more profits, it has several other key pros.
Ever frustrated at the unexpected results of a plan? Any plan? In fact, no plans in the world are error-free, and all plan executors are often worried about the possible outcomes and unfavorable side-effects. However, in the psychology of pricing, minimal attention is required, as such pricing tactics are all targeting human beings, and I suppose human beings are the only buyers in the world?
Having said that, there’s certainly no area for failure in terms of using psychology in pricing, but just the effectiveness and the positive results you are getting that need serious efforts and work put into, in other words, the amount of work determines your rewards. Nonetheless, split-testing is the best option.