Marketing Honestly Show

Have you noticed that most online course prices end in number 7? Why is that? Well, in today's episode we'll answer that question, plus we'll find out if it's ethical to use what is essentially a cheap psychological trick. And maybe a joke or two, as always.

Show Notes

Have you noticed that most online course prices end in number 7?

For example, instead of a $2,000 price tag, the course creator will market the course for $1997?

It's called "Charm Pricing," or sometimes "Psychological Pricing."

It's essentially a cheap psychological trick that virtually every retailer uses to give the perception that their product is cheaper than it actually is and to encourage a purchase.

You'll also notice that if the price tag is in the thousands, it will not only end in a 7 (sometimes 9), but often the comma separating the first and second digits is removed, likely to make the number seem smaller than it really is.

For example, $2,000 looks way bigger than $1997, doesn't it?

Does charm pricing actually work?

There have been some studies on this subject, and while the psychology of consumer behaviour with charm pricing is interesting, the studies reference retailers not online course creators.

And in these studies, some concluded that there isn't enough statistical significance to make a big difference in sales, that is to say... it only kind of works, maybe, sort of.

So my thought is that charm pricing isn't a magic bullet for generating online course sales, and I think you're better off charging a fair, even-numbered price (i.e. $200 vs. $197) because:
  1. People aren't stupid, they know how much you're really charging
  2. It makes you look like every other course marketer
  3. Its use will not have a significant impact on your sales
  4. Its use may backfire and give an impression that you're not being honest (since many dishonest marketers use it)
Are marketers being intentionally manipulative by using charm pricing?

No, I don't think so. There may be some marketers who use charm pricing because they believe it gives the perception of greater value, or a "lesser price" and ultimately encourage a few extra sales, but most marketers are doing it because it's what everyone else is doing.

As mama always said, "If your friends jumped off a bridge, would you do the same?"

I just think that charm pricing is unnecessary, and may potentially have the opposite effect of what you're going for.

Now if you'll excuse me while I go update my prices to make sure I'm not a total hypocrite...

Resources mentioned in this episode

What is Marketing Honestly Show?

An unconventional marketing podcast by aspiring tap dancer turned marketer, Brad Hussey, who attempts to answer the question, "Is it possible to build a successful and ethical online business? Or are we doomed to use dishonest tactics and deceptive marketing to succeed?".