Sellingnomics: Is Charm Pricing effective?
Welcome to the latest issue of Sellingnomics magazine. In this issue we evaluate Charm Pricing, a pricing strategy used by brands like Apple, Uniqlo and others. Read the magazine issue to know how you can use it for your online store too.
What is Charm Pricing?
Studies have shown that consumers perceive just-below prices as being lower than they actually are. For example, Apple prices the iPhone as $999 and most shoppers psychologically round the price down to $900 rather than rounding up to $1000. Perceiving the iPhone to be almost 100 dollars cheaper!
Hence, these just-below prices (like .99, .95,.97,.98) are believed to drive greater demand and work almost like a charm on buyers. Hence, the name Charm Pricing.
Is Charm Pricing effective?
We analysed over 1.5 million stores across 150 countries and 23 categories, to see if stores using the charm pricing strategy are performing better. We found that stores using charm pricing on an average make 4% more than stores not using charm pricing.
Charm pricing leads to better conversions, brand recall and increased sales.
Read the latest issue of sellingnomics to get insights on what charm pricing strategy your peers in the industry and country are using.