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10 Proven Psychological Pricing Strategies with Examples

Psychological pricing strategies tap into human psychology to increase sales. Applying a deep understanding of how shoppers think can help business owners set the best prices for their goods and services. Studying examples of psychological pricing strategies is key to understanding how you can apply these methods to your own business models.

Below are the 10 key psychological pricing strategies with examples you should be using to make a better impression on potential customers.

1. Charm Pricing

What It Is: Charm pricing is a tactic that can make a product appear less expensive than it actually is in the eyes of a customer. You’ve probably seen an example of charm pricing in action any time you’ve noticed an item’s price ends in “9.” For example, why should an item cost $4.99 instead of $5.00?

Because most people read from left to right. This is as true when they’re reading prices as it is when they’re reading anything else.

Example of How Charm Pricing Works: Take, for example, an item priced at $4.99. Even though it costs only one penny less than a five-dollar item, a shopper may think of it as a four-dollar item because the number “4” is what they see first. This is one of many psychological pricing tactics that can make someone “feel” an item has a lower price than it might actually have.

Shoppers focus most on the leftmost digit in a price. Thus, you could reduce a $5.00 item’s price by a single penny just to change the leftmost digit. This can have a major impact on whether a customer decides a product is worth their money.

That said, sometimes, this pricing strategy isn’t useful. Consider the example of a luxury watch from Tiffany & Co. This item’s price is a perfect $6,500. The same type of pricing can be found for other such items on Tiffany & Co.’s website.

Consumers are used to prices of everyday items ending in “.99” A luxury item appears more exclusive when it’s priced differently. Luxury brands often use whole numbers to set their products apart from others.

That’s not the only tactic that can increase sales for luxury items. Further down, this post will explain how customer demand for certain luxury items may actually increase when those items are sold at high prices.

2. Small Fonts

What It Is: Your psychological pricing strategy should not merely determine the cost of your products and services. It should also determine how prices are displayed.

It’s not simply what people see when they read the price of an item or service you’re offering. What’s equally important is how they see a price.

Consider using a smaller font than you normally do when displaying prices in your mortar stores and e-commerce business. This is a particularly smart tactic if an item’s price is somewhat high. While you don’t want the font to be so small that it’s easy for shoppers to overlook an item’s price, the font also shouldn’t be so large that it calls attention to an item’s price.

Researchers have found that the size of an item’s displayed price impacts the way consumers feel about its actual cost. Unless an item is offered at a very low price, displaying its price in a large font will make someone feel the price itself is high. If that same price is displayed with a smaller font, a consumer will see it as having a lower price.

Example of How Using Small Fonts Works: Many real-world examples of this strategy can be found in a supermarket or other such large store. Pay attention to how prices are displayed when you visit such retailers. Some prices may be displayed in clear view with large fonts. Odds are, those prices are for items that are on sale.

Now check how the prices for expensive items are displayed. If they’re not on sale, you’ll probably find the list price of these items is displayed in a less attention-grabbing way.

Again, this isn’t a tactic that’s ideal all the time. It’s best when you’re offering a high-priced item, and you don’t want customers to think of it as being too expensive.

Keep in mind this also isn’t a tactic to use when displaying an item’s sale price. The next section of this guide will explain how using large fonts may be the better tactic when advertising an item that’s available for less than you’d usually charge.

3. Large Fonts for Discount Prices

What It Is: Displaying an item’s price with a smaller font size might be smart when your goal is to make a higher price seem smaller. However, it’s sometimes smart to use a large font when displaying an item’s price.

Research shows this tactic works when displaying a discounted or sale price next to the normal full price of an item or service. If the list price is shown with a much smaller font than the sale price, the customer will be more likely to feel they’re getting a good deal.

It’s easy to understand why. The customer might only casually notice the list price that’s displayed in a smaller font. However, the sale price, which is in a larger font, captures a customer’s eye.

Example of How Using Large Fonts Works: You can spot this tactic in action by visiting Amazon.com when a sale is happening. For example, this item is currently available at a discounted price for those with Prime memberships. The list price appears in a small gray font.

The discounted price’s font is much larger. It’s also red. This combination of color and size makes it stand out. The study linked to above suggests this will make the deal come across as more attractive to shoppers.

4. Countdown Clock

What It Is: Consumer psychology research from the dissertation of Shipra Gupta of the University of Nebraska – Lincoln (The Psychological Effects of Perceived Scarcity on Consumers’ Buying Behavior) shows that a sense of urgency can affect a person’s choice to buy something. Keep this in mind when setting prices for discounted items.

Don’t just display dollar signs and product prices when advertising items that are on sale for a limited time. Along with the price of an item, include a countdown clock letting potential customers know how much time they have left to take advantage of a great deal.

Example of How a Countdown Clock Works: You’ll often see brands using this strategy in holiday sales emails. An email highlighting the discounted price of an item during the holiday shopping season will feature a countdown clock clearly telling a reader that a deal won’t last forever.

This is a unique psychological pricing trick when compared to several others on this list. It’s different because it doesn’t actually have anything to do with the price of an item.

Instead, it allows brands to draw attention to their pricing. If you’ve done your research and decided it’s smart to sell a product at a discount for a certain period of time, you want to be sure your target audience will notice the discounted price. This strategy helps achieve that goal.

A similar strategy involves setting up artificial time constraints. You might have noticed that some retailers appear to offer “One-day only!” sales seemingly every weekend.

You’re not imagining this. While the items that are on sale might vary from one weekend to another, a store that offers these types of deals will likely always be offering discounts of some kind. Highlighting the fact that a specific discount is only available for a single day simply tricks a customer into feeling they need to make a purchase now.

5. Don’t Use Commas in Prices

What It Is: Many examples of psychological pricing don’t truly involve changing an item’s or service’s price. Instead of testing different prices, brands keep the same prices but experiment with ways to make those prices seem lower.

One study shows that simply removing commas from the price tags of costly items can affect how expensive these items appear to shoppers. For example, instead of writing a price out as $1,500, it’s smarter to write it out as $1500.

Keep this in mind if you’re recording audio in which you state an item’s price. The study linked to above also reveals that the more syllables a person hears when a price is said, the larger that price will seem to be.

Example of How Eliminating Commas Works: “One thousand five hundred dollars” has eight syllables. “Fifteen hundred dollars” has six syllables. Choosing to say the latter when recording an ad for a product will make it seem less expensive.

6. “Decoy” Prices

What It Is: This is a tactic you might use when you’re offering multiple versions of a product or service with different prices for each.

For example, you might be offering an app subscription. One version of the subscription is quite affordable but has limited features. The other has more features but is noticeably more expensive.

Potential customers may struggle to decide between the two. This can prevent them from choosing either one. Or, they might be more inclined to choose the less expensive subscription.

Example of How Decoy Pricing Works: Some companies address this with decoy pricing. This tactic involves offering a third option that’s inferior to the others. Researcher Dan Ariely studied this tactic by considering how the magazine The Economist offered subscriptions to customers. At one time, the magazine offered two subscription options:

  • Web-only for $59
  • Print only for $125

When these two options were available, 68% of customers chose the more affordable web-only option. The magazine then introduced another option: web and print for $125.

This new price made the print-only option much less desirable. It also made customers feel they were getting a better deal if they chose the print and web option for $125. This resulted in 84% choosing this option.

7. Don’t Bundle Inexpensive Items With Expensive Ones

What It Is: Using psychology when setting product prices is as much about what you shouldn’t do as it is about what you should do.

Bundling items together can sometimes entice customers to make a purchase. Shoppers feel they are getting a deal when two similar products or two products which complement each other cost less to purchase in a bundle than they would cost to purchase separately.

However, sometimes bundling has the opposite effect. This occurs when a valuable item is bundled with a much less expensive item.

Example of How Selecting Bundling Works: Researchers found that bundling a costly item like a home gym with a low-cost item like a fitness DVD impacts how valuable customers perceive an item to be. With this type of bundle pricing, customers don’t add up the values of the two items they’re buying. Instead, they average them.

This reduces the perceived value of the home gym. By pairing it with a low-value item, marketers also make it appear to have minimal value.

Remember this when setting bundle prices. Selling a higher-quality item with a low-quality item can affect how valuable shoppers consider it to be.

8. Center Stage Pricing

What It Is: When you watch a play, often, the main action is happening in the center of the stage. That’s the spot we naturally consider to be of the most importance.

This also applies to customer behavior. Many online stores and brick-and-mortar retail stores take advantage of this when displaying prices.

Example of How Center Stage Pricing Works: Refer to the subscription plan page for Microsoft 365 to see an example of this. The two subscriptions the company likely most wants to promote are in the center of the page. Less expensive subscription options are displayed on the side. Placing the subscriptions the company wants customers to choose in the center of the page is the best way to ensure customers notice them.

9. Prestige Pricing

What It Is: In his book Influence, Robert Cialdini tells a surprising story about a jewelry store owner who was struggling to sell certain items. She’d attempted numerous strategies (including offering the items at half price) but had little success.

One day, she left instructions for an assistant to again reduce the prices by half. The assistant misread the instructions and doubled the prices of these items.

The result? They quickly sold out.

Prestige pricing is meant to attract customers by using price as a way of telling customers that certain products are quite valuable. Usually, the practice of setting prices involves trying to determine what’s the lowest price you can reasonably offer without sacrificing earning money. You want to find the sweet spot between a reasonable price for the customer and a reasonable price for the company.

However, there are instances when it makes more sense to increase the price of an item. This doesn’t just tell a customer that an item is valuable and high-quality. It may also have a positive impact on the overall brand image.

Example of How Prestige Pricing Works: Consider the example of Apple. Some point out that Mac computers often have very similar hardware to PCs. Still, they often cost significantly more.

This hasn’t had a negative impact on sales. The opposite is true. Macs sell much better than other PCs do. Again, this might not be because they’re truly superior products. The surprising truth is likely that the higher prices of Macs actually make consumers more likely to buy them.

The high price of a Mac, when compared to a PC, has a psychological impact on a customer. It tells a customer a Mac is an exclusive product. This makes a customer want to purchase one.

Prestige pricing may be most effective when used to price items that can serve as status symbols. Mac users probably enjoy being seen using their Apple products. People who buy luxury watches want others to notice their watches.

That’s an important point to consider when setting the price of a product. Before choosing a price, think about what type of product you’re selling. If it’s one that customers will want to show off to others, prestige pricing may be a smart tactic to use.

10. Partitioned Pricing

What It Is: This is a clever way to “reduce” the full price of a product without actually changing the price at all.

A partitioned price is one in which the original price of an item or service has been broken up into separate fees. Research shows that offering an item at a seemingly lower price and listing other fees separately instead of adding everything up and offering a single price boosts sales.

Example of How Partitioned Pricing Works: You can see examples of this tactic being applied whenever you buy an item from an online store. Shipping will almost always be a separate fee. The store might also add “convenience fees.” This allows a retailer to sell an item for seemingly less than it actually costs.

However, you have to be careful when using this strategy. Surveys and studies have also revealed that many online shoppers abandon their carts without making purchases when shipping fees and other such costs are unexpected. It’s best to therefore err on the side of caution and make sure these fees are clearly displayed along with the actual price of the item or service you’re offering.


Psychological pricing techniques like those listed here work because they’re based on studies of consumer behavior. Using them can simplify your approach to business. Instead of guessing how much money you should charge for a product or service, you can set a price that will have a strong psychological impact on a customer. This product pricing will result in an measurable increases in sales.

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