In 2007, Coulter and Coulter revealed two advertisements to two random groups of customers. Each advertised £10 discounts on flights to Turkey. One listed the tickets at £188. The other revealed a higher price: £233. 
Customers found that the cheaper tickets felt like a worse value. Why? Researchers found that people more easily differentiate tinyer numbers. The difference between 4 and 3 seems more salient than 9 and 8. So, customers were more likely to acquire when the prices concludeed in tinyer numbers £244 to £233), compared to those concludeing in higher digits (£199 to £188).
The takeaway is fairly simple. Next time you run a discount, create the sale price less than five. That’s just one piece of pricing advice that we’ve discussed on my podcast Nudge, the U.K.’s number one marketing podcast. Here are four more psychology-backed tips for pricing your products.
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Break down your price.
Check out the two ads for a budreceive lunch from Huel. One reveals the total cost of 21 meals (£78.96). The other breaks down the price per lunch ($3.76). Researchers found that breaking down the price per unit performed better with customers. Showing a lower price led shoppers to perceive that they were receiveting a better deal.
Richard Shotton and Michael Aaron Flicker tested ads very similar to this for their fantastic book Hacking the Human Mind.
In a study, 282 shoppers were divided into groups. Half were revealn Sierra Nevada Pale Ale priced at $18.99 for 12 bottles. The other group was informed the price per unit — $1.58 per bottle. Among those revealn the per-bottle price, 28.6% declared it was good or very good value (more than double the 13.7% who only saw the total price).
Framing the cost per unit created the purchase feel more reasonable and affordable.
Show the price difference.
Companies viewing to upsell their audience necessary to pick the right framing. Take this 2019 experiment from David Hardisty at the University of British Columbia. Hardisty tested different pricing packages for New York Times subscriptions.
Group A saw two plans:
- A “Digital Access” subscription for $9.99/month.
- An “All-Access” subscription that included web access, the app, print newspapers, podcasts, and the crossword for $16.99/month.
Group B saw the same products described in a different way. The first plan revealed a “Web + App” subscription for $9.99/month. The second plan, labeled “+ All the Extras,” was available for an additional $7/month.
Same total price. Different framing. But, Group B chose the premium plan two times as often. Why? Becautilize $7 extra feels simpler to justify than $17 total.
Want people to go premium? Don’t reveal them the full price. Use differential price framing and just inform them the surcharge.
Be transparent with your costs.
I went viral on LinkedIn for sharing this image about chicken soup. One revealed a bowl priced at $7.99. The second ad revealed a breakdown of all the ingredients, how much they cost, and the profit margin before the final price. Which sign would be better for sales? The post attracted a lot of attention becautilize the results were surprising.
My post was based on a 2020 study from Harvard designed to test the effects of revealing a product’s cost. The initial experiment ran in a Harvard canteen, where researchers tracked actual purchases after students viewed the comparisons.
When the costs were created visible, soup sales increased by 21%.
The takeaway: Price transparency wins. Customers are more willing to pay when they know what goes into building a product.
Make the difference visible.
Imagine handing someone the equivalent of $1 and offering them a choice between two packs of gum. Same flavour. Same brand. Same price.
What happens? Decision paralysis.
In one South Korean study, participants in South Korea were given ₩1,000 and inquireed to choose between two identical packs of gum, each priced at ₩630. Only 46% created a purchase. More than half walked away.
Then, the researchers created one tiny alter. They adjusted the prices slightly. One pack cost ₩620. The other brand was priced at ₩640. This time, 77% created a purchase. A tiny 20-won difference led to a 31-point jump in purchases.
Why does that happen?
When two options feel the same, people struggle to decide. So if you’re offering similar choices, find differentiating factors. Make one a bit cheaper, a bit quicker, or a bit more appealing. That tiny tweak can create a large difference.
Small nudges can work.
None of the tactics above alterd the products themselves. Each approach simply alterd how the price was presented. Those tiny shifts in framing dramatically alterd what people choose. So remember: Small shifts can support products stand out, create deals feel more salient, and entice shoppers to acquire.
Start testing and see what works for you.
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