Odd pricing, sometimes referred to as fractional pricing or odd-even pricing, is known to man as the most popular psychological pricing technique ever devised and used. Simply put, odd pricing involves the use of charm prices – prices ending in 9, 95, 97 or 99.
This is a measured step in psychology, as research evidently reports that setting prices a couple of cents below an evenly numbered price can raise conversions up to 21-34% depending on your industry, the product and the scenario.
The Left-Digit Effect
Although there are several more technologically advanced pricing techniques, like PriceManager.com’s web-based reporting and analytics tool, and other more traditional strategies like decoy pricing and pay what you want scheme, odd pricing still remains one of the most effective tactic.
The reasoning behind the impressive raise in conversion from this technique is a phenomenon in psychology and numerology called the left-digit effect. Essentially, this means people look at numbers from left to right and so when they read $9.49, they see “just above $9” and not “just below $10”.
“Just above $9” is still more favorable to the consumer compared to “just below $10”. This effect makes odd pricing strategy work. As backed by studies, prices ending in 9 sell about 60% higher than a digit that ends in 0 which only sells 7.5%.
To push the effect further, some major businesses that commit to odd pricing print out the cents in smaller sizes and so, through physical magnitude, highlight $9 and the consumer is driven to make a mentally influenced decision to purchase a $9.49 product.
It’s all about psychology and illusion. When utilized properly in marketing, these strategies can potentially raise your sales because the psychological explanation behind odd pricing is one that banks on natural human thinking: that humans are more likely to make mentally-influenced decisions than rational ones.