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The Power of Psychological Pricing: How Apple Tricks Your Brain

Updated: Sep 19, 2023

If you’ve ever purchased an iPhone, you’re well aware that they don’t come cheap. Apple products are notoriously expensive, but did you know that the company uses psychological pricing to make their products appear cheaper than they actually are? In this article, we’ll explore how psychological pricing works and why Apple is so successful in using this strategy.


Learn more by watching the video and reading the blog post below:


What is Psychological Pricing?


Psychological pricing is a pricing strategy that takes advantage of the way our brains perceive and process numbers. It's based on the idea that certain price points can make us perceive a product or service as being cheaper or more expensive, depending on how the numbers are presented. This pricing technique uses odd numbers or slightly lower prices to create an illusion of a lower cost.


One of the most common techniques used in psychological pricing is to use odd numbers,

such as £1.99 or £9.99, rather than round numbers like £2.00 or £10.00. The idea behind this is that customers perceive the price as being significantly lower than it actually is, because their brain automatically rounds down to the nearest whole number.


Another common technique used in psychological pricing is to slightly lower the price of a product, even if it is only by a few pence. This can create the illusion of a bargain and make the product more attractive to customers.


Psychological pricing can be effective because it plays on our natural tendency to anchor our perception of value to the first number we see. This means that if a product is priced at £199, for example, our brains will automatically anchor the price in the 100s, rather than the 200s, making it appear cheaper than a product priced at £200.


Psychological pricing is used by many companies, from small businesses to large corporations, in a variety of industries. One well-known example is Apple, which often prices its products just below round numbers to create the illusion of lower prices.


Apple's Use of Psychological Pricing


Apple is a trillion-dollar company, and they use psychological pricing for the vast majority of their products. The iPhone 14 is priced at £849, the MacBook Pro at £2,149, and the AirPods Pro at £249. By using psychological pricing, Apple aims to anchor those leading numbers in your mind to create the illusion of lower prices. This can lead to increased sales, as customers may be more likely to make a purchase if they perceive the product to be cheaper than it actually is.


The Power of Anchoring


Psychological pricing works because our brains read left to right and anchor our perception of value subconsciously by the first number we see. So, if a product is priced at £1.99 instead of £2, our brain perceives it as being closer to £1 than £2. Similarly, if a product is priced at £199 instead of £200, our brain anchors the price in our minds as being in the 100s rather than 200s, giving the product a perception of being cheaper.


The Ethics of Psychological Pricing


While psychological pricing can be an effective way to create a perception of value and affordability, it's important to note that this strategy is not always effective and can backfire if customers perceive the tactic as being manipulative or deceptive. Customers want to feel that they can trust a company to be transparent and ethical in their pricing strategies. Companies should therefore use this strategy ethically and transparently, and consider the potential impact on customer trust and loyalty.


In conclusion, psychological pricing is a powerful tool that companies can use to create a perception of value and affordability for their products. It works by taking advantage of the way our brains perceive and process numbers, and by anchoring our perception of value subconsciously. Apple is a prime example of a company that uses this strategy to great effect. However, it's important for companies to use this strategy ethically and transparently, and to consider the potential impact on customer trust and loyalty.

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