Impact of Pricing on Brand

Impact of Pricing on Brand

In every country, there are companies that are known for being a place to get a deal.  And these places almost always contain numerous sales and prices that end in .99 (or .95 if the local currency doesn't have units of .01).  On the flip side, there are very prestigious companies that have expensive products and only use whole number pricing.  However, is there a correlation between pricing and the brand image?  I believe there is.

Lets start on the low-end.  Companies that sell cheap products almost always use decimal pricing.  This is simply because  if they want to increase price from $1.00, they are unlikely to want to jump all the way to $2.00.  It is also true that they usually have prices that end in .99.  This has led to consumers attaching a link between .99 and cheap products.  That's not to say that a low cost product is poor quality, but consumers may assume this is the case, even more so with .99.

So what about .95?  This subtle change can increase the perception of your brand.  You rarely see companies that advertise sales or cheap products with a .95 ending.  This is because they know that there is a rough attachment between .99 and a deal.  But what does this mean for volume and revenue?  It is likely that you will make less money pricing with .95 than .99.  You need to consider if it is worth the change (no pun intended!) or not.

Then we get to whole number pricing.  It can be considered frivolous and greedy to attach decimals to a product of value.  As you would expect, many expensive products don't carry decimal prices.  Imagine buying a house and it had .99 tacked on the end.  On the flip side, sometimes a company will want to include decimals to seem more expensive.  This is because the brain perceives more numbers in a price to be more expensive.  For example, $10,120.99 will be probably be considered more expensive than £10,130.

Again though, testing is everything here.  You can try to measure the brand impact of prices for your company as this will vary depending on MANY different variables.  When you have some data then you will need to make a call on whether you choose one method over another, even if there is a revenue impact.  Sometimes short-term revenue gains can have long-term implications.