Psychological Pricing Strategy Examples
Eyl-2024
Table of Contents
The Psychology of Pricing 🧠 Don’t leave your revenue on the table with psychological pricing!
Looking at psychological pricing strategy examples, we understand how slight differences in price can dramatically impact the perceived attractiveness of an offer.
Introduction
How you design choices directly influences decisions and behaviors. For instance, when images of flies are placed in urinals, men tend to aim at them, which helps keep restrooms cleaner. The same principle applies to pricing: I want the user to encounter an offer that seems almost too good to pass up and then rationalize the decision to take it.
One-third of users, for example, were influenced by the default effect, leading to a 135% increase in revenue. Here, not only do urgency and scarcity play a role, but also cognitive biases like loss aversion. Additionally, offering more than five packages can lead to decision-making challenges due to the Paradox of Choice, making it harder for consumers to make a decision.
If users don’t rationalize their decision, there’s a higher chance they’ll become dissatisfied later. This is the basic framework of how pricing should be designed.
Who is Denizcan Sanlav?
Today, we’ll focus more on the psychology and behavioral science aspects of pricing rather than traditional pricing strategies. I divide myself into two personas: one focused on marketing and pricing, and the other on product development. On the marketing side, I work alongside my developer co-founders, who help us develop products. You can see some of the projects and products I’m currently working on to the right.
Let’s start with a quick question about pricing psychology: What do you think of this pricing strategy? Which option would you choose?
A well-designed psychological pricing strategy can guide customers to make irrational choices that feel logical to them.
The Psychology of Pricing: Two Experiments with Nudge and Decoy Effects
In pricing approaches like this, we often tend to choose the largest option because the pricing structure nudges us in that direction. For instance, when presented with small, medium, and large package options, the prices often push us to select the largest one.
This example comes from Twitter, where a hypothetical pricing strategy for users was suggested: Which option would you pick? Package One, Package Two, or Package Three?
These psychological pricing strategy examples highlight how businesses can leverage cognitive biases like anchoring to steer customers toward higher-priced options.
In this scenario, Package Two is the most attractive. Package One serves as an anchor, and even though Package Two is quite similar to Package Three, its positioning makes it the most preferred choice.
The Impact of Behavioral Science, Psychology, and Cognitive Biases on Pricing Decisions
In behavioral science and psychology, how you design choices shapes decisions and behaviors. This principle is at the core of pricing strategies. One critical aspect is how we perceive value—how we assess the price of something based on how it is presented.
We are not always rational decision-makers. One of the most iconic examples of our irrationality comes from an experiment conducted at Amsterdam Airport.

Keeping Toilets Clean with a Nudge: The Fly in the Urinal
In this experiment, images of flies were placed in urinals. When men aimed at them, the restrooms remained cleaner. Although this example may seem odd, it demonstrates how subtle nudges can influence behavior.
Reducing Accidents with a Nudge: Lane Markings on the Road
Another example comes from a high-accident area in Chicago, where lane markings were made more frequent as drivers approached a curve. As a result, drivers perceived that they were going faster than they actually were and instinctively slowed down. This simple nudge helped reduce accidents by 36%.
Daniel Kahneman’s System 1 and System 2 Thinking in Pricing
Daniel Kahneman explains decision-making through System 1 and System 2 thinking. System 1 is fast and intuitive, driven by emotions, impulses, and cognitive biases.
It’s where we make irrational decisions. System 2, on the other hand, is slower and more analytical, requiring more mental energy for complex decisions. When we face numerous options, System 2 kicks in, but this can lead to decision fatigue or the Paradox of Choice, where too many options make it difficult to decide.
Why Some Great Products Fail
Despite logical appeal, many products fail because they target System 2 thinking but don’t engage System 1, which is more emotional and impulsive. Jonathan Haidt’s analogy of the elephant and the rider illustrates this well: you can rationally explain something to System 2 (the rider), but if you don’t sway the elephant (System 1), change won’t happen.
This is why even though we know unhealthy habits like smoking or overeating are bad, we still struggle to change.
A successful psychological pricing strategy exploits emotional triggers, prompting customers to make purchases based on perceived rather than actual value.
Psychological Pricing Examples: The Framing Effect
Let’s consider the coffee experiment again. Initially, most people tend to choose the largest coffee size. But by framing the prices differently, we can shift their choices. For instance, when offered a $5 small coffee and a $12 large coffee, the small coffee becomes the preferred option.
However, when a medium $8 coffee is introduced, it becomes the most popular choice. This shift occurs because of the framing effect—how we present and design options shapes the outcome.
Let’s imagine you’re walking through the world of pricing strategy, where every step you take subtly guides your decisions, even if you don’t notice it at first.
Now I’ll explain some examples. And through psychological pricing strategy examples, we can see how small price adjustments can significantly alter consumer preferences.
You come across a video content creation tool. On the surface, the pricing seems straightforward: two packages—$29 for 60 video exports and $69 for unlimited exports. At first glance, most users would base their decision on their anticipated usage.
“Will I really need more than 60 videos this month?” they ask themselves. It’s a typical question that leads to a rational choice based on usage, right?
But then the scene changes. A new option appears—$59 for 100 exports. Suddenly, the unlimited plan for $69 feels more appealing. That $10 difference is no longer about usage; it’s about getting a ridiculously good deal.
This is the magic of the decoy effect—a subtle nudge that makes the more expensive option feel like the obvious choice. Without realizing it, the user’s decision shifts not based on need, but on the feeling that they’re getting more value for their money.
The effectiveness of a psychological pricing strategy lies in its ability to subtly influence choices without the consumer being aware of it.
As we explain psychological pricing strategy examples, the decoy effect stands out for its ability to nudge customers towards the intended option without them realizing
Now let’s move to the next example, where a company uses AI to audit landing page copies. They present their product for just $2, but when users go to checkout, they see an option to pay $13. It’s still entirely up to them, but the pricing screen gently nudges them to stick with the higher number.
This is known as the default effect, where people are influenced to go with the default choice simply because it’s there. In this case, one-third of users paid more than the base price, resulting in a 135% increase in revenue—a leap made possible just by harnessing psychological tendencies.
Then there’s the final twist in our story: scarcity and urgency biases come into play with a lifetime deal for a Twitter-enhancing tool. The pro package is priced at $27, and there’s pressure to buy because it’s framed as a limited-time offer. Users feel a pang of loss aversion—“What if I miss out on this deal forever?” That fear pushes them to act quickly, even if they didn’t initially intend to purchase.
In the end, what seemed like simple pricing options turned out to be a carefully crafted path, designed to guide decisions using cognitive biases and behavioral psychology.
That’s the power of pricing psychology—where a few thoughtful tweaks can lead users to feel they’ve made the right decision, while businesses enjoy the rewards of increased revenue.
Framing Effect in Pricing Psychology
To better understand the framing effect, it’s essential to explain psychological pricing strategy examples that demonstrate how specific pricing structures influence customer perceptions.
One of the key principles in pricing psychology is the framing effect. I designed the pricing structure in a way that presents three different options: you can either pay $9 monthly, $27 for three months, or opt for a lifetime deal at $27.
The lifetime deal becomes far more compelling when compared to the other options, making it a much more attractive and profitable choice. This approach highlights how framing can significantly influence consumer decisions.
When we explain psychological pricing strategy examples, we can see how even a minimal change in pricing can completely alter consumer perception.
The BJ Fogg Behavior Model in Pricing
“In order to create effective behavior change, we must explain psychological pricing strategy examples that align with motivation, trigger, and barrier removal.”
Another important concept is the application of the BJ Fogg Behavior Model to pricing strategies. According to Fogg, for behavior change to occur, three elements must align: motivation, the removal of barriers, and a trigger to prompt action.
On many landing pages, we often find that while the user is motivated, and barriers are removed, there’s no clear reason for them to take action immediately. If we fail to capitalize on the moment when the user is most engaged, the hype fades, and they may lose interest. This is especially crucial in B2C contexts, where urgency and immediate action are key.
This urgency is best illustrated when we explain psychological pricing strategy examples, which create immediate need for action.
Creating Urgency and Scarcity in Pricing
This is a perfect time to explain psychological pricing strategy examples that use loss aversion to prompt quicker action.
To drive immediate action, we need to incorporate urgency and scarcity into our pricing strategy. For instance, we can offer a limited number of lifetime deals, with only a few spots remaining at $27. Once these spots are filled, the price increases to $49.
This tactic leverages both the scarcity bias and the loss aversion bias. Humans are hardwired to avoid losses, and the idea of missing out on a deal triggers a strong emotional response. By doing this, we create a sense of urgency for the user to act now, making the $27 option appear even more appealing.
These psychological pricing strategy examples demonstrate how altering the structure of pricing options can lead to more favorable outcomes for businesses.
Pricing Mistakes to Avoid
There are several common mistakes in pricing strategies that should be avoided. One example is offering a confusing pricing structure, which can lead to ambiguity bias. Ambiguity can be dangerous in psychological pricing strategy examples like this
For instance, some companies provide free options for paid users, which only adds to the confusion. Another frequent mistake is displaying a pricing page without any actual prices, which is a tactic seen in many SaaS products. These errors can frustrate users and reduce conversion rates.
We must also explain psychological pricing strategy examples that show what to avoid, ensuring clarity rather than confusion.
The Importance of Cognitive Biases in Pricing
There are over 200 cognitive biases that influence consumer behavior, and understanding these is crucial for effective pricing. Some of the most important biases in the context of pricing include the framing effect, scarcity bias, urgency bias, and loss aversion bias.
These biases directly impact how consumers perceive value and, ultimately, what they are willing to pay. I will share some additional resources for those interested in learning more about this topic.
By incorporating scarcity and urgency, we explain psychological pricing strategy examples that drive instant purchasing decisions.
Irrational Pricing Framework
When designing a pricing strategy, we often look for frameworks that work well in influencing consumer choices. One effective approach is to offer three to five pricing options, with a clear target package in mind. The goal is to make this target package—the one you want the customer to choose—so attractive that it stands out as the best option.
When consumers first see the offer, they should immediately recognize its value, engaging their intuitive System 1 thinking. Later, they will rationalize their choice with System 2 thinking, ensuring they feel satisfied with their decision.
These psychological pricing strategy examples show how the presentation of pricing options can create a sense of urgency, pushing consumers to act faster.
Crafting the Product and Pricing Together
I always recommend that during the product development stage, you sit down and write out the landing page, focusing on the unique value proposition and how to frame the product effectively. This exercise not only clarifies the product’s benefits but also helps shape the pricing strategy, making the technical side of the product easier to develop. By thinking about how to sell the product early on, you create a better foundation for both the product and its pricing.
Resources for Further Learning
For those who want to delve deeper into pricing psychology, I recommend several books that combine behavioral science and marketing. These resources, along with various trainings I’ve attended, are excellent starting points for learning how cognitive biases and consumer behavior affect pricing strategies.
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