5. “Just below” pricing — does a small price drop really increase sales?

One of the most well-known psychological pricing techniques is the “just below” strategy (also known as “odd/even pricing”). It’s based on what's called the “left-digit effect,” which means that consumers tend to judge a price based mainly on the leftmost digit. So a price of 2.99 PLN is anchored in the mind as “2”, while 3.00 PLN is mentally categorized as “3”.

This phenomenon has been confirmed in multiple studies (e.g. by Manning and Sprott in 2009, and Thomas and Morwitz in 2005), and applies not only to prices, but also to product features. For example, research has shown that used car buyers in the US were willing to pay significantly more for a car with mileage just under 10,000 miles than for one just above that threshold^[1]. In another study^[2], stock traders were more likely to buy shares priced one cent below a round number (e.g. $179.99).

So we can see this strategy works — and not just for prices. But how can we apply it most effectively?

A 2020 study^[3] suggests that the best results come from combining “just below” pricing with strikethrough prices, using anchoring heuristics (e.g. original price: 4 PLN; current price: 2.99 PLN). This makes the buyer focus only on the first digits of each price (4 and 2) and mentally calculate a difference of “2”. It’s a simple way to boost the perceived value of the discount and increase the likelihood of purchase.

 ^[1] Lacetera, Pope & Sydnor, 2012
^[2] Bhattacharya, Holden & Jacobsen, 2012
^[3] Sokolova, Seenivasan & Thomas, 2020