Price Tag - The Psychology of Numbers

STRATEGY   |   POSTED ON 25.09.2015

The Psychology of Numbers

Humans are complex, emotional and often make decisions based on reflex, instinct and impulse. This makes understanding how people interpret information and data, make purchasing decisions and take actions all the more important. More specifically, understanding the psychology of numbers is very useful for brands and businesses, particularly those running eCommerce sites, tracking apps and software or any business where numerical information is integral to the customers’ product experience and their decision making process.

Framing Effect

This is when the same information is presented with slight variations which can drastically impact perceptions and decisions.

can_of_coke-168x300

Consider a can of Coca Cola:

  • 355ml of refreshment
  • 140-150 calories
  • 39 grams of sugar
  • 9 1/3 teaspoons of sugar
  • Surpassing the recommended maximum daily sugar allowance

All of these figures are correct but the slight variation or framing of the numbers makes the product either more or less desirable.

Anchoring

Anchoring is essentially using numbers to create a sense of competition and choice. If you offer two products that do the same job but one is priced at $1000 and the other at $695, chances are that consumers will buy the $695 unit in larger amounts assuming they have received a good choice, a bargain. Many businesses create two similar product price points with this strategy in mind.

Charm Pricing

For the last few years customers have been charmed by the 99-cent deal, where an item priced at $49.99 was more desirable than an item priced at $50. But times are changing and customers are now more likely to see 99-cent pricing as cheap rather than quality. So how can charm pricing work in today’s market? If you are presented with the price tags below, which would you choose?

numbers-01

Statistically, the $2000 is the most attractive and perceived to cost less. Why? The removal of the comma and the decimal points makes the number the customer is paying seem less.

Take this tactic a step further:

numbers-02

Removing the dollar sign reduces the emotional pain of paying for the product or service and increases the propensity to spend. This is a strategy that is often used by high end businesses such as restaurants and luxury goods but it is now filtering down to other businesses, particularly online stores.

Consider how your business can use the psychology of numbers to understand how your complex customers are likely to view the figures and make their decisions. To learn more contact Liquid Creativity, your local branding specialist.

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