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Pricing Just Below Round Numbers Improves Sales but there’s One Exception

Under a now widely accepted marketing strategy, pricing just below a round is believed to improve sales. In India it is often associated with a highly popular Indian footwear brand.

The logic is that a price like Rs.799 or Rs.1899 creates a subconscious perception of items being less expensive even if they are just a few rupees away from a higher round figure price. 

However new research reported in Harvard Business Review (July – Aug 2022) flags off an important exception. According to HBR, “If you’re seeking to upsell Customers, setting the price of the basic option at or just above a round number gets better results” 

Let’s say your company offers two product options. A basic option X and an upgraded option Y. If you price Option X at Rs.999 and Option Y at Rs.1200, going by HBR reported research buyers will be resistant to upgrade to Y after seeing X. On the contrary, if X is priced at Rs.1000 and Y at Rs.1200, we stand a better chance of upselling Product Y to buyers 

The rationale behind this phenomenon is that this kind of pricing makes the upgrade feel less expensive and encourages Customers to go for the upgrade 

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