Have you noticed that some prices have even or odd ends? Don't you think such rates are more attractive and give the feeling that the price is lower than it should be?
Well, this is the psychology behind odd-even pricing phenomenon.
Even though the difference between full and odd-even prices is seemingly small, it actually has great value. Today we'll talk more about this strategy so you can understand why it's so attractive and how to use it.
Odd-even pricing is a psychological pricing method that involves setting prices so that they end in odd or even numbers, such as $9.98 or $9.99. It aims to impact how consumers perceive the price of a product.
Odd-even pricing can influence customer perception and willingness to buy, often regardless of the actual production costs involved in the product or service.
This approach is prevalent in various industries, from retail and ecommerce to premium products, with the intent to increase sales and shape customer perception.
The strategy plays on consumer behavior. It creates a perception of value, urgency, a discount, etc. This all influences purchasing decisions.
However, while odd-even pricing can be effective, overly complicated or unclear pricing strategies may confuse potential customers and reduce trust.
But why?
It’s really simple to explain. Just see:
The last digits of a price play a major role in how consumers calculate the overall cost of an item. Here, even and odd pricing creates a psychological effect where consumers think about odd prices as the representation of a better deal.
For example, it can lead consumers to mentally round down odd prices and round up even prices, and affect their perception of the total expense. Using odd-even pricing can make a pricing plan appear more attractive to customers by emphasizing perceived savings.
This method shares similarities with charm pricing, where prices end in “9” (e.g., $9.99). Both strategies encourage customers to perceive the price as lower and more affordable than a rounded number. For example, a product priced at $19.99 may be perceived as closer to $19 than $20. Odd-even pricing can also make customers feel like they are getting a discounted price, even if the reduction is only a few cents.
What does this mean? That people can add multiple items to their cart, believing they are pocketing extra savings.
The odd-even model can trigger specific actions, such as prompting clients to buy without meticulous evaluation. That’s because such selling prices, particularly with odd numbers, can create a sense of urgency. Also, consumers may perceive odd prices as temporary discounts.
As a result, they influence potential buyers to make quicker purchase decisions. This sense of urgency can help attract customers who are motivated by time-limited deals or perceived bargains.
Incorporating this model can be tricky. However, if you can correctly identify prices that end in odd or even numbers, you can gain many benefits. It's important to note that the effectiveness of odd-even pricing can vary across different customer segments, so consider the needs and behaviors of each group when applying this strategy.
Here they are:
Implementing odd and even pricing strategies can contribute to an enhanced brand perception. They position your brand as one that offers better sales and discounts than anyone else. Like we have said before, customers see more value in prices and feel like they are saving money. As a result, they see your brand as much more attractive than competitors.
By appealing to value-conscious buyers, odd-even pricing can also help brands increase their market share.
As people feel urgency, they are able to make quicker purchases, buy more, recommend the offer to friends, etc. This results in increased sales volumes and frequencies. Odd-even pricing can also influence how much customers pay and how frequently they make purchases, as the pricing structure can encourage more frequent buying decisions or higher spending per transaction. Such odd-even pricing strategies are particularly effective in retail and ecommerce, where creating a buzz can entice larger audiences to buy.
Using even and odd pricing can help consumers buy products they wouldn’t have purchased before because they thought they were too expensive. But if the price gets more attractive-because it dropped a few pennies-their willingness to buy may increase. This boosts their satisfaction and ties them to the brand as they wait for further bargains.
Odd-even pricing can also help retain existing customers by reinforcing the perception that they are consistently receiving good value.
However, we also have some disadvantages of odd even prices.
Among them are:
Before you use odd or even pricing, you better understand consumer segments, industry dynamics, and the psychological nuances that influence purchasing decisions. It's crucial to analyze different customer segments to ensure your pricing strategy aligns with their specific expectations and behaviors. Misjudging these aspects can result in a mismatch with consumer expectations and affect the effectiveness of the even and odd pricing strategy.
This psychological pricing strategy works with many target audiences, but not all. Not every customer will be caught by an apparent price cut of a few pennies or one cent. Many potential buyers are very aware of the psychology behind price setting. For potential customers who recognize these psychological pricing tactics, odd-even pricing strategies may be less effective in influencing their purchase decisions. For them, whether your price is the whole number, like 10.00 or incomplete, as 9.99, it won’t make much difference. They can also turn against you with the thought that you have imposed odd prices to capitalize on their money.
In the world of SaaS pricing models, customer feedback is one of the most valuable resources a business can leverage. Listening to your customers and analyzing their behavior allows SaaS companies to fine-tune their pricing strategy, ensuring it resonates with the target market and meets evolving customer needs. When it comes to implementing odd-even pricing, this feedback becomes even more critical.
Odd-even pricing setting price points like $9.99 or $27 instead of rounded numbers-can make your SaaS product appear more affordable and appealing. But to truly maximize its impact, SaaS businesses need to align these price points with what their customers value most. This is where gathering and analyzing customer data comes into play. By collecting feedback through surveys, support interactions, and usage analytics, SaaS companies can identify which pricing models and price points drive the highest conversion rates and customer satisfaction.
For example, many SaaS companies use tiered pricing to offer multiple plans-such as basic, premium, and enterprise-each with its own set of features and price. Odd-even pricing can be applied to these tiers, making each plan feel like a better deal and encouraging more sign-ups. Similarly, the freemium pricing model, which provides a free basic plan with paid upgrades, can benefit from odd-even price points for its premium features, making the jump to a paid plan feel less daunting.
Other popular SaaS pricing models, like per user pricing and usage-based pricing, also lend themselves well to odd-even strategies. Whether you’re charging a fixed monthly price per user or billing based on actual usage, setting prices at strategic odd or even numbers can help your SaaS business stand out and attract more customers.
The key to success is ongoing analysis. By continuously gathering customer feedback and monitoring how different price points perform, SaaS companies can adapt their pricing structure to maximize revenue growth and maintain a competitive advantage. This data-driven approach ensures that your pricing model remains aligned with customer expectations and market trends.
Ultimately, combining customer feedback with odd-even pricing tactics empowers SaaS businesses to create pricing strategies that not only drive conversions but also foster long-term customer loyalty. Whether you’re experimenting with tiered pricing, freemium models, per user pricing, or usage-based pricing, leveraging customer insights will help you find the right pricing model for your SaaS product and unlock new opportunities for growth.
So much for theory, now check out how the giants are using strategies that involve this method. Many leading companies strategically use odd-even prices on their pricing page to enhance the perceived value of their offerings.
1.Apple
Apple, a global tech giant, employs odd-even strategies across its product lineup. For instance, the monthly installment for an iPhone is not the full price, and the ending is odd or even. (e.g., $41.62). This psychological effect suggests a lower cost to consumers and subtly shows they can afford Apple’s products. Given the premium quality of Apple’s offerings, such a price may seem even more low.
2. Walmart
Walmart also widely incorporates odd-even models. Many of its products are priced with odd numbers, such as $19.97 or $29.99. Thanks to odd endings, they really create the impression of affordability. Such prices led people to perceive Walmart’s offerings as budget-friendly and aligned with the brand’s positioning as a cost-effective retail destination.
3. Amazon
Amazon couldn’t be missing from our list. The e-commerce giant strategically uses odd and even prices to influence its buyers. On this platform, you will find plenty of great deals with just such prices. As you can see, even during promotion, the price has an end of 99. Such activities are part of Amazon’s customer-centric approach and contribute to the overall positive shopping experience on Amazon.
4. Starbucks
Now Starbucks-a global coffeehouse company. It uses odd prices on its menu, often ending at positions such as $3.75. This example of an odd approach builds the perception of affordability and plays into the psychology of small, incremental price differences. Typically, people see odd prices as slightly lower and are more eager to make additional purchases or upgrades.
5. Zalando
And here’s Zalando, a leading online retailer of shoes, fashion, and beauty. It also has examples of odd or even prices in its product selection. Just see the selling price of Nike’s shoes usually ends in odd cents, such as $119.95. This strategy shows that despite Zalando offering high-quality products with a touch of exclusivity, it sells them at more attractive prices. Thus, we feel a subtle sense of affordability, while prices are not as small as we really think.
Now learn about some good tips that can enhance your price effectiveness, strengthen customer relationships, and contribute to the overall success of your business. Selecting a suitable pricing strategy that aligns with your business goals and customer expectations is crucial, and odd-even pricing can be a valuable component of this approach.
Establishing the right prices for your products or services can be so confusing, but with Valueships, you’re in expert hands.
Our specialized team excels instrategy consulting, pricing consulting, value-selling, and advanced analytics and research. What does this mean?
That we guarantee your business model will be optimized and work in your industry.
Want to know how we can do this? If so, contact us or read our case studies-they all showcase our expertise in improving business metrics, discovering new monetization options, and implementing value-selling techniques. So, whether you need assistance in setting the right prices, adopting value-selling strategies, or refining your overall pricing approach, Valueships offers tailored solutions.
Our expertise spans various industries, including SaaS, Custom Software Development, E-commerce & Marketplace, and Professional services. We specialize in helping any SaaS company develop and implement effective pricing strategies to drive growth and profitability.
Prices are not just the value of your product in a given currency. It’s a factor that incredibly affects how often and in what quantity people will buy your goods. To invite them to purchase, you can use a strategy that involves establishing prices at even and odd levels. By doing so, you can boost your profits, increase customer satisfaction, and improve the perception of your brand.
Finding the right pricing strategy is essential for driving sustainable growth and maximizing your business success.
And if you think you’ve outgrown this task, contact Valueships.
We will leverage our capabilities and expertise and help your company implement optimal price strategies that will drive sustainable growth.
Certified expert in price, revenue and margin management in B2B companies and e-commerce. Member of the prestigious Professional Pricing Society. At Valueships, he is responsible for the implementation of consulting projects and taking care of the profitability of clients. Prior to joining Valueships, he worked at McKinsey & Company in the area of pricing and strategy.
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Certified expert in price, revenue and margin management in B2B companies and e-commerce. Member of the prestigious Professional Pricing Society. At Valueships, he is responsible for the implementation of consulting projects and taking care of the profitability of clients. Prior to joining Valueships, he worked at McKinsey & Company in the area of pricing and strategy.
