February 3, 2017

The Psychological Impact Of Pricing

small business saleWe all know that pricing is part math and part art – but it’s also part psychology.   An interesting study from Ohio State University, published in the Journal of Consumer Research, found that how expensive or inexpensive a product was impacted how healthy consumers’ believe the product to be.

For food producers who are trying to market to a health-conscious audience or highlight health claims, this is important to take into consideration.  Not only did the study find producers could charge more for food products that were healthy, but that consumers may not believe a product has the proclaimed health benefits if it is not priced high enough.

“The findings suggest that price of food alone can impact our perceptions of what is healthy and even what health issues we should be concerned about,” said Rebecca Reczek, co-author of the study and professor of marketing at The Ohio State University’s Fisher College of Business.

Reczek argues, in an article published by Ohio State University, that having a higher price tag makes it easier for consumers to believe that the product is healthy regardless of whether or not the nutritional label supports that.

As such, when determining your product pricing you should not only take into account your product costs and your competitors’ prices, but also how you believe consumers will judge and value your product based on the price point you associate with it.

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