When pricing a client’s property, is there a science or psychology behind it? Absolutely. Pricing is intricately tied to marketing, and a strategic price can significantly enhance the effectiveness of your marketing campaign, positioning the property attractively in the marketplace. Let’s explore four psychological principles that can influence the pricing strategy.
1. Adjust for Online Pricing Benchmarks
In today’s digital age, buyers predominantly shop for homes online. Recent data shows that 100% of buyers used online tools in their search, with 41% starting their journey by looking online. Given this, it’s crucial to align your pricing with online search behaviors. For instance, many real estate platforms use $25,000 increments for price filters. If you price a home at $352,000, it may be overlooked by buyers capping their search at $350,000. Adjusting the price to $350,000 ensures the property appears in more searches, increasing its visibility.
2. The $19.99 Syndrome
It’s common to see properties priced at $199,999 or $199,900. This practice harks back to the 1880s when ending prices in 99 was believed to make a deal seem more attractive. However, this strategy may not serve you well in today’s market. For example, a home priced at $199,999 might be missed by buyers searching within the $200,000 to $225,000 range. Pricing it at $200,000 would make it visible to buyers searching between $175,000 to $200,000 and $200,000 to $225,000. Moreover, pricing at round numbers can align the property with luxury brands, which often avoid the “.99” pricing, reinforcing a perception of higher quality.
3. The Power of Four and Seven
Research into pricing psychology highlights the effectiveness of using the numbers four and seven. Prices like $247,000 or $244,000 appear precisely calculated, suggesting to buyers that there’s little room for negotiation. This perception can work in the seller’s favor. Additionally, these unique prices stand out in a crowded market, much like sale items at Home Depot or Wal-Mart, which frequently use these numbers to differentiate themselves. The “Right Side Digit Effect” also comes into play; a price like $227,000 can seem like a better value than $229,999. These numbers evoke a positive emotional response and are often associated with quality and luck.
4. How You Write the Price Matters
The presentation of the price in marketing materials can also impact perception. According to a study by the Journal of Consumer Psychology, how a price is written can influence how expensive it feels. For example, $1,400.00 may seem higher than $1400 because the latter is simpler and less formal. When creating property fliers or ads, writing the price without commas, such as $177000, can make it seem more appealing. Interestingly, a Cornell University study found that written-out prices, like “five dollars,” often led to more sales than when the price was presented as a numeral.
Conclusion
Pricing a property is more than just a numbers game; it’s a strategic tool that, when used effectively, can greatly enhance your marketing efforts. By considering online search behaviors, avoiding outdated pricing tactics like the $19.99 syndrome, leveraging the psychological power of certain numbers, and being mindful of how prices are presented, you can position your client’s property to attract more attention and ultimately achieve a successful sale. Pricing is not just about numbers—it’s about understanding the buyer’s psychology and using that knowledge to your advantage.
