What is psychological pricing?
Psychological pricing sets a price by how shoppers will read it, not only by what the product cost you. The best-known kind is charm pricing: $19.99 instead of $20, because many shoppers read a price from the left. Other kinds cross out a higher price, round a price to signal quality or show a price per item.
Psychological pricing examples
Say you sell clothing.
| Tactic | Example | What shoppers read |
|---|---|---|
| Charm pricing | A tee at $19.99, not $20 | Under $20 |
| Anchor price | A hoodie at $45, with $60 crossed out | $15 saved |
| Prestige pricing | A wool coat at $240, never $239.99 | Top quality |
| Quantity breaks | Socks at $12 a pair, or 3 pairs at $10 each | The pack is the deal |
| Decoy pricing | A $38 tote beside a $40 tote and pouch set | The set is the deal |
These tactics work because shoppers rarely know what a product should cost, as Shopify's guide notes.
What is charm pricing, and does it work?
Charm pricing ends a price just under a round number. In three field tests, a $9 ending raised demand every time, a 2003 study in Quantitative Marketing and Economics found. It helped new items most, and seemed to help less beside a "Sale" sign. In one test, a women's clothing catalog sold more of an item at $49 than at $44, Chicago Booth Review reported.
Charm pricing can backfire when the next price up crosses a round number. At a campus coffee stand, 29% of buyers chose the large cup when the small cost 95 cents and the large $1.20. At $1 and $1.25, 56% did, a 2021 Journal of Consumer Research study by Ohio State researchers found. Keep a product and its upgrade on the same side of a round number. Test a new ending on a few products first.
Is a crossed-out sale price legal?
Yes, when the old price is real and recent. In Shopify, the old price goes in "Compare-at", the box under a product's price, and your theme can show it crossed out beside the sale price. The FTC's Guides Against Deceptive Pricing accept a former price you offered openly for a reasonably substantial period. Raising a price for a few days so the cut looks bigger is the false bargain they describe. In the EU, an announced price cut must show your lowest price over at least the 30 days before it.
A price per item on every tier, with Sledge
Sledge does not set, test or change your product prices. In Sledge Volume Discounts, "Show prices per item" turns a tier's total into a price for each item, and your regular price can sit crossed out beside it. Growth Intelligence turns on when you pick a paid plan. Its suggested fixes add up to one sales figure in your store's currency, labeled "Est. potential".
