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Extra Features and Video Online FloristsReview.com R E A D O N L I N E 61 Effective Pricing Strategies According to Profi tWell, a Boston, Mass.-based business platform that researches pricing-strategy data, one of the biggest mistakes made by companies is not understanding the importance of having a pricing strategy. In its free downloadable guide (profi twell.com/recur/all/ psychological-pricing), Profi tWell asserts that, " rough a variety of psychological pricing strategies, stores are specifi cally designed to encourage [customers] to spend more than [they] intend." In the guide, Profi tWell defi nes psychological pricing as "A pricing strategy that utilizes specifi c techniques to form a psychological or subconscious impact on consumers" and "Setting prices lower than a whole number." To help retailers understand and optimize pricing strategies, the in-depth guide off ers an example of psychological pricing. " e idea behind psychological pricing is that customers will read the slightly lowered price and treat it lower than the price actually is. For example, an item that is priced $3.99 is often perceived by the consumer as $3 rather than $4." e Profi tWell guide cites four examples of psychological pricing that explain consumer perception and the impact certain pricing strategies can have on potential sales. 1 Artificial Time Constraints Signs that say "One-day only!" create a false sense of urgency and are designed to "act as catalysts to get consumers to spend." e guide explains, "If potential customers believe that the sales are only temporary, they're more likely to make their purchases today rather than next week. Consumers are afraid of missing out on obvious deals, so they make the purchases in order to avoid a potential feeling of regret or missing out." 2 Charm Pricing Profi tWell defi nes this as " e offi cial name for all those 9s you see at the end of prices in stores. Studies have proved that prices ending in 9 create increase customer demand for products. is is driven by the fact that we read from left to right, so when we encounter a new price at $1.99, we see the 1 fi rst and perceive the price to be closer to $1 than to $2. In essence, ending your prices in a 9s convinces customers that you're off ering a great deal." Other studies indicate that some consumers perceive products with prices ending in .95 as being of higher quality than products with prices ending in .99. Simply put, a price of $19.95 could give a product more cachet in some consumers' minds than a price of $19.99. 3 Innumeracy Defi ned as " e phenomenon where consumers are unable to recognize or understand fundamental math principles." For example, the consideration of which is a better deal between two options, such as "Buy one, get one free" or "50% off when you buy two." A recent study showed most consumers are more enticed to purchase by the fi rst option, even though the cost of the items is the same in both options. Most consumers like to get something free, even if they have to pay full price for the fi rst item. Use the "Buy one, get one free" strategy especially when you want or need to move lots of a specifi c item or items. 4 Price Appearance is psychological pricing method involves listing prices "$19" instead of "$19.00," which can impact how customers perceive the value of the products off ered. "Longer prices appear to be more expensive for consumers than shorter prices, even if they represent the same number. is is because, subconsciously, the longer prices take more time to read. is eff ect is compounded by the use of a "$" sign for prices." One way to utilize this strategy is to omit the "$" signs from your pricing, and if you're pricing at a whole number, forget the ".00" as well; e.g., simply 19 instead of $19.00. is pricing technique can also give products (and the store) a higher perceived cachet. If you want to combine this tactic with charm pricing, consider making the ".99" in a smaller font than dollar fi gure (19 .99 ). Omit the "$" signs from your pricing, and if you're pricing at a whole number, forget the ".00"

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