How do you price your products and services?
This is a great question and one that I get fairly often. Knowing how much to charge for something that is of value to any consumer is arguably one of the most important factors that go into marketing that product or service.
But where do you begin? I’m here to break it all down for you.
The gist: Psychological pricing is the practice of setting prices to nudge buyers emotionally, like charm pricing ($99.99 in place of $100) or ending prices in odd numbers to signal a deal. Just Marketing® favors round, easy-to-budget prices based on your costs and the value you provide, so customers can make informed decisions.
To start, I am going to talk about the different pricing models there are:
Physical Products: calculate the cost of production and add a profit margin.
Services: hourly rate for your time or value-based pricing (what your buyer thinks the service is worth)
There is another model of pricing that may come into play, one that you may not even know you’re using: psychological pricing.
What is Psychological Pricing?
Simply put, psychological pricing is a strategy that uses pricing to influence a customer's spending or shopping habits to make more or higher value sales. The goal is to meet a customer's psychological need for something, whether that's saving money, investing in the highest quality item, or getting a “good deal.”
Psychological pricing can be seen as manipulative, taking advantage of the consumer’s emotions to gain a bigger and better profit.
This is one of the major problems with modern marketing today – it’s been influenced by manipulative strategies for so long, that they’re baked right in and we can’t recognize them for what they are.
Just Marketing® is Rewriting the Script
Just Marketing® is focused on unlearning the problematic pieces of marketing so that we can do things differently – with kindness, compassion, and intentionality. In a way that respects our audience of potential and current customers.
First, we have to have an understanding of why the practice was used initially so that we can understand why it’s unjust. Then, we can restructure the way we choose to do business.
I’ve already talked a little bit about psychological pricing. Let’s dig a little deeper and specifically discuss the two most common applications:
- Charm Pricing – Charm pricing involves lowering the left-hand number and ending the price in ‘.99’.
- Odd-Even Pricing – Odd-even pricing, involves ending the price in an odd number to signify a deal – whereas adding a price in an even number signifies premium prices.
What Is Charm Pricing?
Many potential stories have circulated about where “charm pricing” originated. I don’t think that the actual origin story matters all that much. What matters is that humans have a ‘left-digit bias,’ where our perceptions and evaluations are disproportionately impacted by the leftmost (aka the first) digit of a product.
Marketers of the past discovered that if they lowered the first digit in a price by one, more people would purchase the product. Of course, they still wanted to profit as much as possible, so they kept the remaining numbers as high as possible. For example: $100 became $99 —- or even $99.99. They realized they didn’t need to discount a whole dollar – they could have the same effect by discounting a single penny.
The idea behind charm pricing is that this is a savings that the business won’t miss, and it doesn’t actually help the customer either.
What this means is that if two comparable products are sitting next to each other – one is priced at $50 and the other is priced at $49.99 – on a subconscious level, we perceive the $49.99 product to be a better value because of the first digit. The 4 is less than the 5 (from the $50 product).
Once marketers realized that the way they priced products could psychologically influence a customer to react emotionally instead of rationally (because rationally we KNOW $99.99 is basically $100), they continued to study pricing psychology so that they could continue to manipulate buyers.
What Is Odd-Even Pricing?
Marketers of the past soon began to realize that it’s not just the first digit in a price that matters, the last digit of a price also has a subconscious impact on how people perceive the price.
When people come across a price that ends in an odd number, they perceive a deal, whereas even digits are perceived to signify premium prices.
This is why we see so many offers that end in 7, and 9:
$3.77
$47
$297
$1,299
And it’s why it’s uncommon to see even digit prices:
$4.66
$66
$98
$3,000
I’m going to take this tactic a step further.
Because charm pricing “came first”, and it was so common for prices to end in .99 due to that practice, we subconsciously see prices that end in 7s (or 4s – even though that's an even number) to be an extra deal because it’s lower than 9.
I know that you’re probably sitting down and making these calculations every time you price one of your products. I also feel fairly confident in saying that you do tend to go with the flow and that when you ultimately settle on pricing, it does in fact, end in a 7 or 9.
I am not exempt from this at all – for the longest time my average ad client was paying me $1,297.
Why?!
No one actually wants to budget like that. In fact, in many cases, people would subconsciously round up and say “So, basically, $1,300?” Eventually, I just changed the pricing.
Why make people do extra work?! Why should I try to trick people into thinking it’s a better deal than just charging the nice round easy-to-math number?
I also did it with my membership.
Many current members still pay $9/month – but new members are paying $10. Not because I wanted to raise my prices by $1 – but because it’s basically the same thing and I want people to make informed decisions based on easy-to-understand numbers.
Why Is Psychological Pricing a Problem?
I’ve very briefly touched on some of the problems associated with psychological pricing. Let’s dive a little deeper into these problems:
- Deceptive – It’s an attempt to trick your audience into making a decision that they’re not ready to make. If they were ready to make it, they would not need to be influenced by these psychological tricks.
- Misguided – It’s an attempt to take advantage of our clients and make them think our product costs less – rather than focusing on the actual value of the product/service.
- Rushed – It relies on people making impulsive decisions, rather than well-thought-out decisions. Instead, we should focus on ensuring that the value we provide is clear. We need to make sure that buyers have all the information they need to make an informed decision, rather than pricing our products awkwardly in an attempt to influence sales without thinking about your budget or other rational considerations.
- Mistargeted – Another problem with using charm pricing in an attempt to make your buyers feel like they’re getting the best deal, is that these bargain shoppers are often more devoted to the pricing than the merchant. This is a poor way to build community and relationships.
- Temporary – This isn’t a long-term plan. Psychological pricing strategies are not a sustainable way to set prices. It may boost your sales initially, but it will only last for a little while. In the long run, you won't attract more clients just because you altered your prices.
At the End of the Day, Psychological Pricing is Manipulative.
Is that the way you want to start a relationship with a new customer? By tricking them?
I would hope not.
When you’re pricing your products or services, stick to the economics of product pricing – and leave the psychological pricing out of your equations.
Sure, you may give up on some sales, but it’s more empowering to build a business with integrity, knowing that you’re allowing customers to make thoughtful decisions, rather than relying on manipulation.
Plus, those sales you’re “losing” were not the committed clients you WANT anyway. Allow those people to spend more time in your ecosystem and make the decision to invest when they’re ready.
When we focus on impact, the income naturally follows, along with raving fans.
Let’s Keep This Conversation Going
You can build a business rooted in consent, clarity, and connection – and you don’t have to do it alone.
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FAQs
Charm pricing is the practice of ending a price in .99 or lowering the first digit by a small amount, like pricing something at $49.99 in place of $50. It works because people tend to focus on the first digit, so the price feels noticeably lower even though the difference is just a penny.
Odd-even pricing uses the last digit of a price to shape how people perceive it. Prices ending in odd numbers, like $47 or $297, tend to signal a deal, while even, round prices tend to signal premium quality.
Psychological pricing relies on subconscious reactions to nudge a purchase, which can feel manipulative, especially when it encourages impulsive decisions. Pricing in clear, round numbers respects your customers’ ability to budget and decide thoughtfully. Many values-driven businesses see that transparency as part of building trust.
Start with your costs, your time, and the value you provide, then choose a clear, easy-to-understand number. Spell out exactly what’s included so people can compare options confidently. Flexible options, like payment plans, can also make your offer more accessible without relying on pressure tactics. Learn why one-time offers can leave out the people you want to serve.
You may see fewer impulse purchases, and that’s okay. Round, honest pricing tends to attract clients who’ve thoughtfully chosen to invest, and those clients are more likely to stay, refer others, and become loyal fans.
Left-digit bias is the tendency to judge a price mostly by its first digit. It’s why $19.99 often feels much cheaper than $20, even though they’re nearly identical. Knowing about it helps you spot when pricing is designed to influence you.
