What is SaaS Odd-Even Pricing?

Odd-even pricing is a psychological pricing tactic where businesses set prices using odd digits like 9, 7, or 5 to create the perception of affordability. This tactic uses the left-digit bias, where consumers focus on the leftmost number to round down a price. Pricing a product at an even, rounded $20 may be associated with a perception of quality, rather than a low price.

Odd-even pricing, often using fractional pricing, creates the perception of a lower price. For example, a SaaS business can create the illusion of savings by pricing their product at $19.99 instead of $20. Although the difference between the two values is small, consumers will perceive it as a more affordable option.

Odd-even pricing, especially charm pricing, can impact a SaaS business’s revenue by framing the products as affordable. In price-sensitive markets, this can impact sales and conversion rates. Additionally, it can bring benefits to SaaS businesses in comparison to the whole-number price tactic.

Regarding SaaS and software products, odd-even pricing can be implemented in several specific situations.

For one thing, the market your product is part of should be sensitive to prices. This pricing approach may be considered when cost is a primary customer concern. Also, if your market is competitive, having a slightly lower price can make customers purchase your products instead of other existing alternatives.

This pricing approach can also be applied when introducing your product, with the quantity of activated free trials being a particular area of attention.

Odd-even pricing can have an impact on the SaaS company’s reputation, since odd prices signal a discount, but when employed heavily, it can influence the customer less.