# Pricing Psychology

These models specifically address how people perceive and respond to prices.

## Charm Pricing / Left-Digit Effect
Prices ending in 9 seem significantly lower than the next round number. $99 feels much cheaper than $100.

**Marketing application**: Use .99 or .95 endings for value-focused products. The left digit dominates perception.

## Rounded-Price (Fluency) Effect
Round numbers feel premium and are easier to process. $100 signals quality; $99 signals value.

**Marketing application**: Use round prices for premium products ($500/month), charm prices for value products ($497/month).

## Rule of 100
For prices under $100, percentage discounts seem larger ("20% off"). For prices over $100, absolute discounts seem larger ("$50 off").

**Marketing application**: $80 product: "20% off" beats "$16 off." $500 product: "$100 off" beats "20% off."

## Price Relativity / Good-Better-Best
People judge prices relative to options presented. A middle tier seems reasonable between cheap and expensive.

**Marketing application**: Three tiers where the middle is your target. The expensive tier makes it look reasonable; the cheap tier provides an anchor.

## Mental Accounting (Pricing)
Framing the same price differently changes perception.

**Marketing application**: "$1/day" feels cheaper than "$30/month." "Less than your morning coffee" reframes the expense.