Pricing Psychology - Pricing in Catering and SMEs

Prices influence buying behavior in a particular way. Many pricing strategies are based on various psychological studies. The so-called pricing psychology is very emotional. The term is essentially concerned with people's perception and behavior with regard to pricing decisions. How do people decide to buy a particular product or not? Which psychological aspects play a role in pricing as an entrepreneur? Here you can find out how you can use the results from pricing psychology perfectly for your company and which factors you should pay attention to when pricing.

reward system

When making a purchase, the buyer must part with his money, which activates the pain center in the brain. Discounts and coupons counteract this and alleviate this type of pain. If an offer contains such additions, guests become very receptive to them. Gifts such as vouchers, free services, bonuses or loyalty points are subject to the reciprocity effect. That means something like give and take. As a company, you feel committed to the giver, i.e. the customer. There are various options for this. The rewards here also depend very much on the product and the target group. According to this, you can promise older people a reward that gives maximum security. Younger people, on the other hand, are more likely to impress you with the prospect of extraordinary experiences. Let's say you run a pizzeria. You want to thank your customers and encourage customer loyalty at the same time. The Socialwave marketing package combines this and makes both possible. Your customer logs into their WLAN and receives an email or SMS, depending on their choice. With the saved contact details, you can now use vouchers to encourage your customers to come back. If a customer hasn't been there for a long time, they will receive an email with an unbeatable offer, such as “Your favorite home pizza — valid until 01.03.2022.” We humans are always happy when we get something for free. As a result of the offer, the customer revisits your pizzeria and redeems the voucher. He may also buy himself a drink. Lo and behold, your turnover increases and the customer leaves your pizzeria satisfied and, in the best case, also leaves a good review.

Product presentation

With our senses, we perceive impressions and stimuli from the environment. When presenting a product, it is therefore all the more important to appeal to as many senses as possible. In the digital sector, you should focus on auditory and visual presentation; the visual, acoustic, gustatory, olfactory and haptic senses of customers should be activated during the presentation on site. This includes, for example, the design of the menu in restaurants.

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Use beautiful, emotional and unusual descriptions for your food and drinks. The right choice of words makes your food look more valuable so that guests are more willing to pay more for it.Another important aspect of designing your menu is presenting your payment options, particularly the credit card logo. Sales psychology studies show that money is much looser when you don't have to physically part with it, but can simply pay by card. Accordingly, you should place credit card logos large and clear on your menu. Other visible places, such as the front door, should also be equipped with the logos. In general, the highest possible design of the menu card is also considered an important influencing factor. The type of material used also plays an important role. According to this, thick paper, for example, makes a significant difference compared to thin paper in a transparent case. Of course, this depends on the type of food and the image of the restaurant. It is also important to use words such as low, reduced, low, reduced, or little. Psychologists confirm that their use influences guests' perception of prices. Don't call the prices low yourself. Yet the words automatically rub off on the price and subconsciously make it look cheaper. This phenomenon is called priming. Priming means the gentle pressure to be steered in a specific mental direction by implicit external stimuli, which leads to an unconscious influence on perception and decision-making processes. The value of a product and the perception of prices depend primarily on the subjective opinion of the potential customer, yet the way the prices are presented is extremely important.

Principle of scarcity

We humans subconsciously always strive for freedom. When an opportunity is rarer and less achievable, it seems extremely valuable to us. This is automatically calculated by us. The same applies to product procurement. For this reason, products are particularly attractive to us when they are only available in limited quantities. The shortage here may be due, on the one hand, to the limited number of pieces or, on the other hand, due to the time limit. It leads to an intensification of our desire for the matter. Our efforts to purchase this product are also being enormously strengthened. Whether the shortage actually exists or was only created artificially is irrelevant at this point. The only important thing is that the customers who were able to get hold of the product feel great pleasure.

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Deductions and surcharges

People love to receive and win something. You can also convey this feeling to your customers using psychological pricing. Offer your customers an extra charge or a deduction. Behavioural pricing studies show that deductions are, however, better received than surcharges. For example, when the electronics retailer offers a discount for self-collection instead of charging for delivery. On the one hand, it gives customers the feeling that they have saved something and, on the other hand, if the customers have opted for the more expensive option, they do not have the feeling that they have paid an extra charge. No matter which option the customer chooses, they go home satisfied and happy.

The effect of numbers

Non-round prices initially seem smaller than round prices for most buyers. Non-round prices trigger different feelings. They give the customer the feeling that the value of the product has been calculated precisely. Meanwhile, round prices usually still represent potential for price negotiation. According to this, you ultimately achieve lower sales with a round price. According to studies, currency symbols on price lists influence our buying decision. Prices appear lower to us when there are no currency symbols and perform better psychologically speaking than advertised prices with a currency symbol. Customers are more likely to buy at a higher price if there are no currency details next to the price. In order to comply with the legal requirements, you must still indicate the currency in the footer of the price list, on a separate sign in the shop window or at the small edge of the price tag.

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conclusion

Pricing psychology is an issue that should not be underestimated. High prices don't necessarily scare off customers. In this case, it is important to present the prices correctly. Use your creativity and learn from the reaction of customers and sales figures whether you want to maintain or change your pricing policy. Strong cooperation with sales and marketing also promotes your individual price management so that your customers are always satisfied.You can find more information about the Socialwave marketing package here.