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Use case

Psychological pricing

You wish to implement psychological pricing on part of your catalog, for example by proposing prices of the type X.99 €.

The objective is to stimulate elasticity thanks to the effect of the psychological price without biasing the calculation of the optimum price.

Challenges

   Identify the cases where it is preferable not to use a psychological price, taking into account the price display environment.

   Identify possible “inelastic” segments where products are not price sensitive

   Rapidly and homogeneously deploy one or more rounding price rules throughout the catalog

Méthodology

   Identify the optimal price configuration using the customer’s price sensitivity calculation (elasticity) – Example: €87.12 is my optimal price.

   Iterate around my “optimal” price, using “.99” logic, with a different psychological price – Example: 84.99 vs 86.99 vs 87.99 vs 89.99.

  Assess the extent to which the price point layer adds value

  Deploy the price point that best fits the objective.

  Apply optimal price rounding up or down on the optimized price

Achievements

  Our experience shows that “psychological pricing” can provide a 10% volume increase in an inelastic segment!

  Iterate around my “optimal” price, with “.99” logic, with a different psychological price – Example: 84.99 vs 86.99 vs 87.99 vs 89.99.

  Round up or down the “optimal” output price defined by the customer’s chosen use case optimization.

  +70% of products displayed with a consistent and optimal rounding rule

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