Skill: staybased/pricing-psychology (version 1.0.0)

# Pricing Psychology — Strategic Pricing Framework Design pricing that converts using cognitive biases and proven psychological principles. Sources: Phoenix Strategy Group, ScaleCrush, NetSuite research, SaaS pricing studies (2024-2026). All outputs go to `workspace/artifacts/`. ## Use when - Setting prices for products, services, or subscriptions - Designing pricing pages or tier structures - Evaluating whether current pricing is leaving money on the table - Preparing proposals or quotes for clients - Choosing between pricing models (flat, tiered, usage-based, etc.) - Repricing after market feedback or competitive analysis ## Don't use when - Internal cost accounting or budgeting (this is about perception, not COGS) - Commodity pricing where market sets the price (gas, raw materials) - Regulatory/government pricing with fixed rate schedules - Charity/nonprofit where pricing psychology feels manipulative ## Negative examples - "Calculate my profit margins" → No. This is pricing perception, not accounting. - "What should I charge per hour?" → Borderline. Use this to FRAME the rate, not calculate it. - "How much does AWS cost?" → No. This is for setting YOUR prices, not understanding others'. ## Edge cases - Freelance rate setting (Upwork, etc.) → YES. Framing and anchoring apply heavily. - "Should I charge $29 or $30?" → YES. Charm pricing analysis directly applies. - Negotiation prep → YES. Anchoring is the #1 negotiation tactic. - Free tier decisions → YES. Free-to-paid conversion is a pricing psychology problem. --- ## The 9 Core Principles ### 1. Charm Pricing (Left-Digit Bias) Prices ending in .99 or .97 feel significantly cheaper than the next round number. **The science:** Our brains process left-to-right, anchoring on the first digit. $9.99 feels like "$9-something," not "$10." **Impact:** Studies suggest charm prices can outperform rounded prices significantly (estimates range from 10-24% depending on context and product category). Moving from $4.99 to $5.00 typically causes a 3-6% sales drop. **When to use:** - Everyday products, subscriptions, impulse buys - Price-sensitive audiences - Competitive markets where $1 perception matters **When NOT to use:** - Premium/luxury positioning → use round numbers ($100, not $99.99). Round prices signal quality and confidence. - B2B enterprise deals → round numbers feel more professional - Very high price points (>$1,000) → the .99 looks cheap, not smart **Application to our products:** - ClawHub skills: $9 or $19 (not $10 or $20) - Alfred's service: $149/mo (not $150) — charm + just below threshold ### 2. Price Anchoring The first price a prospect sees becomes their reference point for everything after. **The science:** Cognitive anchoring bias. A $500/mo option makes $149/mo feel like a steal, even if $149 was always the target. **How to implement:** - Always show your highest tier first (on pricing pages, in proposals, in conversation) - In proposals: state the full value first, then the price. "This system typically delivers $3,000/mo in saved labor. Investment: $149/mo." - Reference competitor pricing: "Podium charges $399/mo for similar features. We're $149." - On pricing pages: Enterprise → Pro → Starter (left to right or top to bottom) **Critical rule:** The anchor must be credible. An absurd anchor ($10,000 for a simple service) backfires and destroys trust. ### 3. Price Thresholds Customers have mental boundaries. Crossing them triggers disproportionate resistance. **Common thresholds:** $10, $25, $50, $100, $500, $1,000 **Strategy:** Price just below the threshold. - $49 instead of $52 - $99 instead of $105 - $499 instead of $520 **The math:** A product at $49 can outsell the same product at $51 by 15-20%, even though the actual difference is $2. **Application:** Our Reef product at $29 (below $30 threshold) — already correct. ### 4. Decoy Pricing (Asymmetric Dominance) Add an intentionally unattractive option to make your target option look superior. **Classic example (The Economist):** - Digital only: $59 - Print only: $125 - Print + Digital: $125 ← everyone picks this because print-only is the decoy **How to design a decoy:** 1. Decide which tier you want most people to buy (your "target") 2. Create a tier that's close in price to the target but much worse in value 3. The target now looks like an obvious bargain by comparison **3-tier formula:** | Tier | Price | Value | Purpose | |------|-------|-------|---------| | Basic | Low | Adequate | Entry point, captures budget buyers | | Pro (TARGET) | Medium | High | Best value ratio — this is what you want them to buy | | Premium | High | Highest | Anchor + decoy (close in price to Pro, makes Pro look smart) | ### 5. Bundling & Unbundling Combining products increases perceived value. Separating them increases perceived cost. **Bundle when:** You want to increase average order value and perceived savings. - "Get all 5 skills for $39" (vs $15 each = $75 separately) → 48% savings messaging **Unbundle when:** You want to show how much you're providing. - Itemize your service in proposals: "SMS automation ($50 value) + booking system ($75 value) + review management ($50 value) = $175 value, bundled at $149/mo" **Key insight:** Bundling works for purchases. Unbundling works for perceived value in proposals and negotiations. ### 6. Scarcity & Urgency Limited availability increases perceived value and triggers loss aversion. **Ethical applications:** - "First 10 customers get founding member pricing" (real limit) - "This rate is locked for 12 months" (real deadline) - "3 client slots remaining this month" (real capacity constraint) **Unethical (avoid):** - Fake countdown timers that reset - "Only 2 left!" when you have unlimited digital inventory - Artificial urgency on non-scarce items **Loss aversion multiplier:** People feel losses ~2x more intensely than equivalent gains. "Save $50/mo" is less powerful than "You're losing $50/mo without this." ### 7. Price Framing Same price, different frame, different perception. **Daily vs monthly:** "$3.27/day" feels cheaper than "$99/mo" feels cheaper than "$1,188/year" — even though they're identical. **Comparison framing:** "Less than your daily coffee" (relatable anchor) **ROI framing:** "Pays for itself in 2 weeks" (investment, not cost) **Per-unit framing:** "$0.12 per automated message" (micro-cost feels trivial) **Best practice:** Frame in the smallest credible unit for affordable products. Frame in ROI terms for expensive ones. ### 8. Social Proof in Pricing What others chose influences what new buyers choose. **Tactics:** - "Most Popular" badge on your target tier (increases selection by 20-30%) - "X customers chose this plan" - Testimonials placed next to the price (reduces price objection) - Case studies with specific ROI numbers near the CTA **For us:** When we have ClawHub downloads, show install counts. "500+ agents use this skill." ### 9. Tiered Pricing Architecture Multiple tiers capture different willingness-to-pay segments. **The rule of 3:** Three tiers is optimal. Two feels like "cheap vs expensive." Four+ causes choice paralysis. **Tier design principles:** - Each tier should have a clear "hero feature" that justifies the jump - Price gaps should feel logical (not 2x jumps — aim for 1.5-2x between tiers) - The middle tier should be the obvious best value (commonly the most selected tier, though exact % varies by market — design it to be the obvious choice) - Name tiers by outcome, not features ("Starter / Growth / Scale" beats "Basic / Pro / Enterprise") --- ## Pricing Decision Checklist When setting any price, run through these questions: - [ ] **Who is the buyer?** (Price-sensitive consumer vs. value-driven business) - [ ] **What's the anchor?** (What will they compare this price to?) - [ ] **Am I below a threshold?** ($10, $25, $50, $100, $500, $1K) - [ ] **Charm or round?** (Everyday = charm. Premium = round.) - [ ] **How am I framing it?** (Daily? Monthly? ROI? Comparison?) - [ ] **Is there a decoy?** (Does my tier structure guide toward the target?) - [ ] **Social proof near price?** (Testimonials, "most popular," customer count) - [ ] **Scarcity real?** (Only use if the constraint is genuine) - [ ] **Have I unbundled in proposals?** (Show itemized value, then bundled price) --- ## Quick Reference: When to Use What | Situation | Primary Tactic | Secondary | |-----------|---------------|-----------| | SaaS/subscription pricing | Tiered + Decoy | Charm + Anchoring | | Freelance rate setting | Anchoring + Framing | Bundling (package deals) | | Product launch | Scarcity + Social Proof | Threshold pricing | | Price increase | Framing + Bundling | Add value before raising | | Competitive market | Threshold + Comparison | Charm pricing | | Premium positioning | Round numbers + Anchoring | Unbundling (show value) | | Proposal/quote | Anchor high → present price | Unbundle + ROI frame | --- ## Key Numbers - Charm pricing outperforms round by 10-24% depending on context (multiple studies, wide range) - 40-95% of retail prices end in 9 (industry standard) - $4.99→$5.00 typically causes 3-6% sales drop - Decoy pricing increases target tier selection by 10-30% (varies by implementation) - "Most Popular" badges meaningfully increase target tier selection (test on your own pages) - Loss aversion: losses feel ~2x stronger than equivalent gains (Kahneman & Tversky, 1979 — Prospect Theory) - 3 tiers optimal; middle tier typically most selected when designed as best value - Advanced pricing psychology can increase average deal size 25-60% (SaaS studies, 2026)


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