Pricing

---
name: pricing
description: Use when setting or reviewing the full price of a product, plan, or add-on for an online store — e.g. "should this be $199, $200, or $197.50", "what should the add-on cost", "should we do a flat rate or pay per use", "where should the price go on the page", "how should I price this for a Japanese audience".
---

# 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

| Item | Value |
|---|---|
| Recommended price | $200 |
| Digit style | Rounded — premium hedonic product, quality is the decision driver |
| Add-ons / components | Monogramming $15 (rounded, same ending as core price) |
| Structure | Flat rate / pay-per-use / n.a. |
| Placement & color | Price below the product image; black (mixed audience) |
| Alternatives rejected | $199 (just-below reads as price-led; save for promotions), $197.50 (precision signals nothing here) |

## 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

| Situation | Digits |
|---|---|
| Premium, hedonic, risky, service, unsure | Rounded |
| Promotion, price-led, cheap and low-risk | Just-below (left digit must drop) |
| Four-figure prices | Low repeating last digits (2,111) |
| Japan / China | 8 ending |
| Want upgrades | Same left digit on both tiers |
| B2B quote, negotiated down | Precise; moderate with experts |
| Bid up (auction) | Rounded |
| Usage-based service | Flat rate, priced above pay-per-use |
| Components / add-ons | Rounded, same endings, no service fee |
| Page layout | Price below the product |
| Mostly male audience, routine purchase | All prices red |

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

Evidence and effect sizes: see [reference.md](reference.md).