Kyu Box Season 2 | Qpisode 07 | Why do prices of most commodities end with 9? | Charm Pricing

TL;DR

Companies use charm pricing, ending prices with the number 9, to create an illusion of lower costs and entice customers to buy.

Transcript

you have ten dollars in your pocket and you lose five what do you have in your pocket the whole have a look at these images what do we see we see items ranging from food to garment electronic devices to its accessory one more observation would be that the prices of these items are in the increasing order okay that's cool anything else that you noti... Read More

Key Insights

• 🤲 Pricing items with the number 9 is a common strategy known as charm pricing, designed to make customers feel like they are getting a better deal.
• 🥡 Charm pricing takes advantage of our emotional responses while shopping, making us less rational and more likely to make impulsive purchases.
• 😘 Our brains take shortcuts when processing numbers, often rounding down prices ending in 9 and making us associate them with lower costs.
• 😒 Companies strategically use charm pricing under specific brands and price bands to attract different customer segments.
• 😒 Different industries, including supermarkets, retail shops, and online platforms, use charm pricing to entice customers.
• #️⃣ Charm pricing is not limited to the number 9, as other numbers like 181, 57, or 63 can also be used for psychological effect.
• 🧍 Charm pricing is more prevalent in competitive scenarios where companies need to stand out and attract customers.

Questions & Answers

Q: Why do companies use charm pricing?

Companies use charm pricing because it creates a perception of lower costs and entices customers to buy. Ending prices with the number 9 tricks our brains into thinking we are spending less.

Q: How does charm pricing exploit our emotional responses?

Our emotional responses when shopping make us less rational and more impulsive. By ending prices with the number 9, companies take advantage of this and make us feel like we are getting a better deal.

Q: Why don't our brains associate 149 rupees with 150 rupees?

Our brains take shortcuts when processing numbers and tend to approach them from left to right. This means we quickly round down prices ending in 9, leading us to associate 149 rupees with spending 140 rupees instead of 150 rupees.

Q: Where else do we encounter charm pricing?

Charm pricing is encountered in supermarkets, retail shops, online streaming platforms, food outlets, and many other places. It is a widely used pricing strategy in competitive scenarios.

Summary & Key Takeaways

• Prices of items in the images range from food to electronics, and they all end in the number 9, which is a common pricing strategy known as charm pricing.

• Charm pricing takes advantage of our emotional responses when shopping, making us feel like we are spending less than we actually are.

• Our brains take shortcuts when processing numbers, so we tend to round down prices ending in 9, leading us to believe we are getting a better deal.