Pricing is not always as straight forward as sticking a “.99” to the end of the price. Like fine art, the perception of prices can vary. In fact, there are many cues that affect the buyer’s perception of price.

Creating the perfect price is a task as easy as creating a draft design that doesn’t receive any client feedback. However, we have a toolbox at our disposal to make our prices seem that much more appealing to our customers. One such tool comes from the world of psychology.

Here’s how psychology can help us make prices look irresistible

Using perception to your advantage

Our perceptions can deceive us. In the early 1900s, psychologist Hermann Ebbinghaus demonstrated that two identical circles can appear different in size depending on their surroundings.  

 But what do circles have to do with pricing? This principle applies to pricing too. Your prices are not viewed in isolation; they are often compared to other prices, called reference prices. Placing your prices next to larger numbers can make them seem smaller by comparison.

Here’s how to set large reference prices

1. Add a premium alternative to your offering

It's common to see services offered at three price points. This is no accident. When faced with two alternatives, buyers are more likely to choose the cheaper. However, when offered a third, premium option, buyers almost always hop from the cheapest to the middle option. This is called the magic of the middle option. Consider this when creating your pricing options: could there be a third premium alternative that you could add into your offering to make your ideal middle option that more appealing?

2. Reference a more expensive price

Having three alternative offerings is not always possible. In these cases, your references might need to be external. Referencing competitors’ prices is a slippery slope, but in many cases, there are recommended prices, barometers, or standard market prices that you can refer to.

3. Offer your services with a discount

Discounts are a simple way to create a larger reference price, as well as create a sense of urgency for the buyer. Discounts are never for forever, so it signals the buyer that the purchase decision must be made now.

By understanding these psychological tricks, you can set prices that not only look more appealing but also genuinely feel like better deals to your clients.