The Psychology Of Pricing And Your Brand

Mention any brand name to someone and the chances are they will have a good idea of the prices they would be expected to pay.  Say “Lidl” or “Aldi” to supermarket shoppers and they will think “low prices”, even “cheap”.

But say the word “Waitrose” and they will think that prices are likely to be higher than in other supermarkets.

You can play the same “brand price game” with other names.  Say “Crowne Plaza” and people expect high prices, but say “Premier Inn” and they do not.  Brands, of course, do everything they can to associate price expectation with their brand name.  One key question for any brand is whether they are luxury or commodity.  Which end of the spectrum do they sit at?

This is the psychology of “framing” – putting a buyer’s mind into the right position in the first place and setting the scope within which they can make purchasing decisions.  You can see framing from almost all of the supermarkets because it so obvious.  They constantly remind people of low prices.  Their slogans and straplines emphasise low prices, as does almost all of their advertising.

The problem with framing people into expecting low prices is that it leads to a downward spiral – no matter what prices you have on offer, people expect them to be even lower because you have made them subconsciously concentrate on low prices.  It doesn’t matter what price a supermarket displays, the shoppers perceive it to be too expensive.

Sometimes the message gets confused because of the psychology of prices themselves.  The way brands display their prices and the numbers themselves can have a significant influence on the way people perceive the brand.  Use the wrong numbers or display prices poorly and people can have an altered perception of the brand.  The digits you use and the way you display them need to be consistent with the framing of the price expectation.

It is no good having a low price framing expectation and then using numbers and displays people associate with high prices.  That just leads to a phenomenon called “cognitive dissonance”, which basically means the brain is confused.  In turn, that means people do not buy.

Choosing The Right Numbers

Many retail brands will display prices ending in a “5”, as in £9.95.  Or they might choose a “9”, such as £599 in a furniture store.  But why do they opt for such numbers?

When the last digit in a price is something like a 5 or a 9 it forces the first digit to be lower.  So when we see £599 our brain starts the price analysis in the 5 arena, not the more expensive setting of 6.  It’s a sofa in the £500 range, not a £600 one.

But the sound of the digits in our head is also linked to how much we expect to be paying.  So “five” is a long vowel sound, whereas “six” is a short vowel sound.  We associate short vowel sounds with a feeling of lower pricing.  In this example “six hundred” sounds cheaper than “five nine nine”.

What this means is that you can associate the right prices with the framing for your brand.  “Five nine nine” is an expensive sounding price that would work better when framing is aimed at high prices.  But if the brand is aiming at low cost expectations then those digits will not work.  Instead, the brand would need short sounding digits, such as “five six six”.  Even though there is a long five, it is followed by two short vowel sounds, which would emphasise the low cost.

There is also research, which shows that the direction of the digits has an impact on our perception of the price.  You will find many stores with items on sale for prices such as £7.89.  The problem with this selection of digits is that they are rising.  The last digit is higher than the first and this affects our price perception.  That’s great if your brand has framed people to expect higher prices.  But if you are framing people to expect low prices, the rising digits work against you.  Hence a price of £7.65 would be better in this instance because the digits go downwards, emphasising the lower price nature of
the brand.

The sound of a price and the direction in which the digits go – rising or falling – has a real influence on the way people perceive prices.  That means, in turn, that selecting the right digits is an important consideration in ensuring that the price perception matches the brand framing in order to avoid cognitive dissonance.  Pricing is not just a matter of getting the maximum you can charge for an item, but also of making the maximum number of people keen to buy.  If the digits selected cause cognitive dissonance then fewer people will buy.

Displaying Prices Appropriately

One of the elements of a price tag that is immediately noticeable is the typography.  This also needs to match the framing of the brand price expectation, otherwise it will also lead to cognitive dissonance.  Framing people to expect quality and having a price-gun sticker using a monospaced font like Courier, is not going to create the psychological connection a brand requires to get people
to buy.

One of the key areas in which brands consistently make an error is in the area of comparative pricing, where they want to show buyers how much money they have saved.  Here they often put the old, original price in small type, crossed out, with the new price nice and big.  But the problem is that buyers perceive big type as representing higher prices, especially when comparisons are being made.   So if a brand needs to emphasise low price because it is comparing to a competitor or a former pre-sale price, the new lower price needs to be in a smaller type size than the old or competing higher price.  This is counterintuitive because designers want to emphasise the better, lower price by making it stand out.  The problem is that buyers subconsciously perceive the smaller type as lower, simply due to its size.  This makes them think the new low price is higher than it actually is.

Of course, if you are at the luxury end of the market, then having larger type sizes for prices, compared with surround typography would have the impact of suggesting high prices, thereby confirming the brand expectations of the buyer.

Pricing Is More Than Saying “How Much”

The prices you display – whether in real world stores or online – have a profound impact on buyers and their perception of a brand and their likelihood of making a purchase.  Use the wrong digits, create the wrong sound in their heads, have mismatching typography and type sizes and you are heading in the direction of confusing your brand perception.  Not only that, you are reducing the chances of people buying from you.