The ABCs of A Pricing Strategy

Have you noticed the pricing patterns and trends of your favorite brand items? When examining the pricing of a SKU, it’s no coincidence. There is a psychology behind pricing, strategies that entice a shopper to make a purchase and complete the sale. Numbers are manipulated to make you buy-what is a more enticing price, for example, $3.93, $4.03, or $3.99. Even the use of a number sign (or lack thereof) is strategic.

With competitive pricing data being utilized by more retailers and consumer packaged goods companies than ever before, the planning and pricing strategy behind every price point is exact, with purpose, and down to a science. Here are a few popular techniques used in pricing strategies that drive sales:


Consumers rely heavily on the first piece of information they gather, when making a shopping decision. By placing two similar items next to one another on the shelf, and pricing one at a significantly higher price, the item that is at the lower price point will seem like a bargain- even if it is not.


Grouping like items or services together, at some discount, as opposed to selling each individually. Bundling can also be referred to as a package deal. It is an easy way to up-sell, when the cost of multiple items is only slightly higher than the cost of one of the single items on its own- customers perceive a higher value.


Putting two similar products next each other, at similar prices. This is often done by retailers with store brand or generic items, placing them next to a name brand on the shelf. A consumer will perceive like quality between two similar items that are about the same price.

Pricing an item is one of the most complex decisions a retailer must make. New strategies that are implemented are monitored closely, as any lift or decline in volume could means hundreds of thousands of dollars. Next time you enter a store, try and spot the package deals or count how many items end with $0.99 cents- once you’re aware of the patterns and techniques, you’ll be astonished how many SKUs with strategic prices you will find.

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Seth Nagle, Senior Marketing Manager at RW3 Technologies understands the power of innovation but also its limitations. Attending Salve Regina in New England, starting his career in Silicon Valley, and now living in Austin, Texas; Seth provides a unique tech perspective to a complex CPG and Retail Grocery Industry that is in constant disruption.

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