Do you care about precise psychological pricing ($9 vs $10)?

I see Marc/Pieter just throwing $10 or $25 as pricing for their products, not worrying about the perceived value of $9 / $9.99, that sort of thing.

Is it because

  1. You believe people translate $9 or $9.99 to $10 anyway, so why bother?


  1. Does it depend on the niche you are serving? What niches would you say, tend to be influenced by such a tactic?

There's a lot of psychology that goes into this and pricing things is a huge science.

My take is that if you price something $4 that's "1 cup of coffee"
If you go higher, you might as well do $9.
If you go beyond $10, you might as well go up to $19
If you do $20+, you might as well go up to $49
If you do $50+, you might as well do $99
If you do $99+, you might as well do $149


Fundamentally here's the algorithm you should use: Test test test. Then test some more.
One approach I've hard is that you should increase your pricing to the point when nobody buys anymore. Then lower to where your ratio between revenue vs. number of sales makes the math work out for your business.

Edit: Another benefit of using standard pricing numbers is that people are used to them and don't waste time thinking about the number. If you have a weird price, it calls attention to it and increases cognitive load in your customers.

@swizec Thanks for the elaborated answer! Totally makes sense to test pricing but only applicable when you have a handful of regular sales coming in. What do you suggest I should do when starting out? Here is what I am thinking - for

I have tried to keep things very simple here - rounded off numbers & all features are included in all plans so shouldn't cause any surprise in customer's head, like you mentioned. Thoughts?

> What do you suggest I should do when starting out?

Find a competitor you like, do what they do.

I think typically $9.99-type pricing converts better because it sounds disproportionally cheaper than $10.

The reason I use $10-type pricing for WIP is because I want it to feel more like a financial contribution than a product/money exchange. Using psychological pricing wouldn't make sense in that case as it has this smell of trickery to it. Especially for people familiar with the concept of pricing psychology like us makers.

For some other products I do use psychological pricing however. Really depends on the product and customer.

I found this book pretty interesting. Pricing strategies, pricing experiments, anchor pricing, etc...

Ohh there is a whole wiki page about this :

Few interesting facts:

  • Judgments of numerical differences are anchored on left-most digits, a behavioral phenomenon referred to as the left-digit anchoring effect.[3] This hypothesis suggests that people perceive the difference between 1.99 and 3.00 to be closer to 2.01 than to 1.01 because their judgments are anchored on the left-most digit.
  • Consumers ignore the least significant digits rather than do the proper rounding. Even though the cents are seen and not totally ignored, they may subconsciously be partially ignored.
  • Fractional prices suggest to consumers that goods are marked at the lowest possible price.

Other articles:

Just google "price 0.99" to see plenty more articles and studies.

Very interesting! I wanna price things ending at .99 as well because I don't want to lose customers, at the same time I want to keep things really simple by perfectly rounding off the numbers. Guess, I will have to go with former approach anyway.

Something else to consider is physical vs digital products. If I buy a physical product for 9.99 and I give 10, I get 0.01 back. The cashier actually gives you something back that you can put back in your pocket which makes you feel better about the purchase. This doesn't happen online though. If you charge $9, I can't pay you $10 and get $1 back. So a whole element of this psychology is missing in digital products

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