Pricing is an overlooked lever that markers and businesses have at their disposal. Specifically, the psychology of pricing is not given the attention it deserves.
Jonah Berger, the Wharton Professor, has developed a simple trick called the Rule of 100. Basically, when showcasing your discounts if the price of your product is under 100, its better to advertise the discount with a percentage off the total (ie 25% off. And when its over 100, its more effective (and more enticing to the consumer) if you use an absolute value (ie $25 off).
Take a pair of $50 headphones. A 20% discount or $10 off. What do you prefer? If you’re like most people, the 20% discount is more appealing, even though they both offer the same discount of $10. Now, take a new home speaker that costs $500. A 10% discount or $50 off. What do you prefer? In this scenario, most people think the $50 off is more appealing, even though they are both offering the same discount of 10%.