Conventional wisdom, while common, is not always wise. Such is the case with setting a product price point.

You are about to learn why you should use a precise price point rather than a round price point when setting the price on a product you wish to sell–and it doesn’t matter whether your product you are selling costs a few bucks or a few hundred thousand.

It will put you in the driver’s seat.

“The Scientific Research”

In the February Psychological Science Journal, marketing professors Chris Janiszewski and Dan Uy of the University of Florida detailed a series of experiments they conducted to find out whether we are really “fooled” into buying when the price is $19.95 versus $20.00.

“People Weren’t Being ‘Fooled’”

They found that people weren’t truly being fooled–they didn’t think the $19.95 price tag was far less than the $20.00, but they typically saw the PRODUCT as being more valuable when priced at $19.95.

Otherwise: The $20.00 price point caused prospects to think maybe the product was actually worth much less–maybe $15.00–but the $19.95 price point caused prospects to see the product as being priced closer to its real value.

“People Think in ‘Price Increments’”

What their experiments confirmed was that people think in price increments when determining the actual value of a product compared to its price point.

When we are given a “round” price point we tend to use larger price increments to compare it with our perceived “true” value. Given a price of $100.00, we tend to look at whether it is “really” worth $75, $80 or $90 dollars.

When we are given a “precise” price point we tend to use smaller increments to compare it with our perceived “true” value. Given a price of $97.00 we subconsciously think in terms of it being within a few dollars–maybe $93 or $95.

“What This Means to You”

If you have a product, price it with a precise price point. Don’t try to sell at $50, try it at $47 or $49.95. If you have a free download, give it a precise value: “A One Year Subscription is Valued at $39.95.”

Psychologically your prospects will perceive a higher value for your offerings. Try it, it will make you money.

“This One is $4.95?

But I’ll guarantee it’s worth hundreds of dollars. See for yourself, click here.

This article is a guest post by Aaron Abber of FullTiltBlogging.com.
I am a part of Aaron’s mentoring program where he is teaching me and others how to make
money blogging. Go visit the site now and grab his free report “How to Retire on 200 Visitors a Day”.