Now that you’ve seen psychological pricing in action, let’s break down the exact strategies you can use to boost conversions, increase perceived value, and make your offers irresistible.

1. Charm Pricing (The Power of .99 & .95)

If you’ve ever wondered why so many prices end in .99 or .95, it’s because this small tweak makes products feel cheaper than they actually are. This works because of the left-digit effect—our brains focus on the first number in a price and subconsciously round down.

For example:

• $9.99 feels much cheaper than $10 (even though the difference is just one cent).

• $199 sounds better than $200, even though there’s barely a difference.

Businesses use this strategy to increase sales without actually lowering the price by much. It works particularly well in retail, SaaS, and eCommerce.

When to use it: If you want your price to feel like a great deal and nudge price-sensitive buyers toward making a purchase.

When NOT to use it: Luxury brands often avoid this because rounded numbers (e.g., $5,000) feel more premium and prestigious.

 
2. The Rule of 100 (Framing Discounts for Maximum Impact)

How you present a discount changes how big it feels—even if the savings are exactly the same. That’s where the Rule of 100 comes in.

Here’s how it works:

• If the price is under $100, use a percentage discount (e.g., “20% off” sounds bigger than “$10 off” on a $50 item).

• If the price is over $100, use a dollar discount (e.g., “$500 off” feels more substantial than “10% off” on a $5,000 item).

Why does this work? Because people perceive larger numbers as better deals, even when the actual savings are identical.

Example of Psychological Pricing in Action:

• A $40 product sounds like a better deal at “25% off” than at “$10 off.”

• A $2,000 laptop sounds like a bigger discount at “$400 off” rather than “20% off.”

This psychological pricing strategy is used by major retailers, SaaS companies, and online stores to increase conversions without changing the actual discount amount.

Use this trick the next time you run a sale, and you’ll see just how much the psychology of numbers in pricing influences customer behavior.


3. Price Anchoring (Making Discounts Look More Valuable)

Ever seen a price tag that says “Was $199, Now Only $99”? That’s price anchoring, one of the most effective psychological pricing strategies for making discounts feel irresistible.

Here’s how it works:

• The first price a customer sees acts as an anchor—it sets their expectation for what something “should” cost.

• When they see the discounted price, it feels like a huge bargain—even if the original price was artificially inflated.

Example of Psychological Pricing in Action:

A restaurant offers a “chef’s special” steak for $79. Next to it on the menu, they list a “regular” steak for $39. Suddenly, the $39 steak feels like a steal, even though the price was never actually discounted.

Retailers and online stores use this constantly. You'll see high original prices crossed out, followed by a “limited-time” lower price. Customers perceive they’re getting a better deal, which increases conversions and reduces hesitation.

When to use it: If you want to make a price seem like a great deal without actually lowering it significantly.


4. The Decoy Effect (Steering Customers to the Best Choice)

Have you ever gone to buy something and felt like one option was obviously the best deal? That’s not an accident—it’s the Decoy Effect at work.

This psychological pricing strategy introduces a deliberately less-attractive option to push customers toward the choice you want them to make.

Example of Psychological Pricing in Action:

Imagine you're at a movie theater and see this pricing:

• Small popcorn – $4.50

• Medium popcorn – $6.50

• Large popcorn – $7.00

At first glance, the medium popcorn seems like a bad deal—for just 50 cents more, you can get a large! The real reason the medium exists isn’t to sell—it’s to make the large feel like the best value.

SaaS companies and subscription services love this trick. They often include a “middle” plan that’s intentionally overpriced to make their premium plan look like the best bang for your buck.

When to use it: If you want to drive customers toward a specific pricing tier or product package.


5. Prestige Pricing (Using High Prices to Increase Perceived Value)

Sometimes, higher prices make people want a product more. This is known as prestige pricing, and it’s a powerful psychological pricing strategy used by luxury brands, high-end services, and premium products.

Why does it work? Because people associate higher prices with higher quality, exclusivity, and status. If something is expensive, our brains assume it must be better.

Example of Psychological Pricing in Action:

A jewelry store sells two nearly identical diamond necklaces:

• One is priced at $499.

• The other is priced at $1,499.

Even though the products are similar, many buyers will assume the $1,499 necklace is far superior—even if there’s little difference. This is why brands like Rolex, Gucci, and Apple rarely discount their products—doing so would actually hurt their perceived value.

This also applies to services. If a consultant charges $50/hour, they may struggle to get clients. But if they charge $500/hour, clients assume they must be an expert.

When to use it: If you want your product or service to be seen as premium, exclusive, or high-quality.

When NOT to use it: If you’re targeting budget-conscious customers or competing on price.


6. Bundle Pricing (Increasing Perceived Value with Packages)

Ever seen a “Buy One, Get One 50% Off” deal and felt like you were getting a steal? That’s bundle pricing—a psychological pricing strategy that increases perceived value by grouping products or services together.

Why does it work? Because people love feeling like they’re getting more for their money. Even if the total price is slightly higher, bundling makes individual items seem cheaper and reduces decision fatigue.

Example of Psychological Pricing in Action:

A SaaS company offers three pricing options:

• Basic Plan – $29/month

• Pro Plan – $79/month

• Ultimate Plan – $99/month (Includes all features + bonus tools worth $300)

Most people skip the basic plan because it seems too limited. But once they see that the Ultimate Plan offers “$300 in extra value” for just $20 more than Pro, they go for the bundle—spending more than they originally planned.

Retailers use this all the time with “value packs” and BOGO deals to boost average order value.

When to use it: If you want to increase perceived value, upsell higher-tier packages, or move more inventory.


7. Pay-What-You-Want Pricing (Letting Customers Choose the Price)

Sounds crazy, right? Letting customers choose how much they pay seems like a recipe for disaster. But when done correctly, pay-what-you-want (PWYW) pricing can actually increase revenue—because people feel obligated to pay fairly, or even generously.

This psychological pricing strategy works best when:

• There’s a strong emotional connection to the product or brand.

• Customers feel a sense of reciprocity (they want to give back).

• Social pressure is involved (like in public settings).

Example of Psychological Pricing in Action:

A restaurant runs a “Pay-What-You-Want” promotion for a new lunch special. Some customers pay less than the suggested price, but many pay equal or even more—especially if proceeds go to charity.

Another famous example is Radiohead’s album “In Rainbows.” They released it online and let fans name their own price. Despite the risk, they made millions—because fans felt loyal to the band and didn’t want to underpay.

When to use it: If you have a strong brand, offer digital products, or want to build customer goodwill.

When NOT to use it: If your audience is price-sensitive and looking for the cheapest option.