Pricing

Choose the digits, structure, and placement of a full price so it sends the signal you want. The last digits of a price tell people whether to think about quality or about cost, complex prices get read as expensive, and where the price sits on the page changes how big it feels.

When to use

• Deciding whether a price should be rounded ($200), just-below ($199), or precise ($203)
• Pricing add-ons, upgrades, and per-unit components
• Choosing flat-rate vs pay-per-use
• Placing and coloring prices on a product page
• Setting an opening price for a negotiation or auction

When not to use

• Working out how much people will pay → the price-research skill
• Wording a sale or coupon → the discounts skill

Inputs

Collect, or state your assumption:

• Product, candidate price, currency
• What the buyer is optimizing for (quality/risk vs price); brand positioning (premium vs value)
• Whether this is a promotion price or the everyday price
• Whether the price will be negotiated, and whether the counterparty is an expert
• Market (Japan/China change the lucky ending)
• Audience gender mix, if known

Classify the product first. Hedonic = bought for enjoyment, pleasure, or the experience (chocolate, fashion, decor, travel, spa, perfume). Utilitarian = bought to do a job, judged on function and value (detergent, appliances, insect repellent, tools, accounting software). If it's mixed, decide by what the buyer is optimizing for at the moment of purchase.

Procedure

1. Default to rounded ($80, $200, $35) when the decision runs on feeling or quality: premium or luxury goods, hedonic products, most services, a premium brand image, or when you want an effortless choice. Note the boundary: the roundedness study found non-rounded prices did better when buyers evaluate analytically (typical utilitarian purchases) — for those, rounded earns its place only as a low-price-image avoidance (a 99-ending signals bargain) or for simplicity, not from that study. The risky-purchase examples (medical, safety) are a practitioner extension. † Also when the price may be bid up (a hot auction, tight housing market). When in doubt, round.
2. Use just-below ($199, $4.99) only when the left digit actually drops relative to the price you'd otherwise charge ($2.99 instead of $3.00 works; $3.49 instead of $3.50 doesn't) and one of these holds: it's a promotion price; buyers are price-focused; you want a low-price image; the item is cheap and low-risk. Lower left digits (1, 4) feel like bigger savings than high ones (7).
   • Four figures or more (common in ¥, ₹, ₺): repeat a low digit in the last three places instead — ¥2,111 beats ¥1,999. †
   • Japan and China: an 8 ending is the convention (prevalence evidence, not a measured lift), not 9.
   • Upgrades: if you want people to step up to a dearer option, keep both prices on the same left digit ($40.50 → $48.50, not $39.99 → $48.50).
3. Use precise ($2,865; $53,832/month) when you need to signal expertise and calculation in a big decision (B2B quotes, renovations) or when the buyer will negotiate down: precise anchors pull counteroffers into smaller steps, so you get fewer but higher offers. With expert buyers, stay moderately precise ($23,750, not $23,721.85) or justify the number with a cost breakdown. Evidence for precise as a "slightly above rounded" everyday price is weaker than for just-below.
4. Prefer a flat rate that covers what most customers want ($50/month, all-in; unlimited revisions), priced above the pay-per-use equivalent — a $6,000 fixed fee beat $50/h × 100 h. Keep pay-per-use only as a low-commitment entry tier.
5. Keep components simple when you must price separately: rounded amounts ($0.10/min, not $0.07), the same ending across components, no service charge tacked on, options easy to compare side by side. Add-ons follow the same rule ($15, not $12.35).
6. Place the price below the product image, not above; the same price reads lower.
7. Color: mostly male audience and a routine, low-scrutiny purchase → every price in red; the effect disappears for expensive or important purchases. Mixed red and black backfires. Audience unknown or mixed → black.
8. Hand off: sale prices → discounts; validating the level → price-research.

Output

Common mistakes

• Picking $195 or $225 "for confidence" with no rule — the choice is rounded because quality is the driver; state the reason.
• Using $9.99 everywhere by habit — just-below cues price-focus and undermines a premium image; use it for promotions and price-led categories.
• $1,999 in a four-figure currency — the just-below effect is overridden; use ¥2,111-style low repeating digits.
• Setting the upgrade tier across a left-digit boundary ($39.99 vs $48.50) when you want people to upgrade.
• Underpricing the flat rate to match pay-per-use — people will pay a premium for the cap on spend.
• Fiddly component prices ($4.61/GB plus a $6 fee) — people assume you're the expensive option without calculating.

Quick reference

† No primary citation on file for this rule — a practitioner tip, not a measured finding.

Evidence and effect sizes: see reference.md.