Price pointing (also known as price point strategy) is a pricing technique where rates are deliberately set at specific, rather than at random or purely cost-based amounts. The prices are set to prices that are considered psychologically appealing.
The purpose of price pointing is to make a price feel right to a potential guest, increasing the likelihood of conversion without significantly impacting revenue.
How Price Pointing Works
Price pointing is based on well-established principles of consumer psychology. Guests tend to evaluate prices quickly and emotionally, often focusing on visual and numerical cues rather than exact value.
For example:
- R1,999 feels noticeably cheaper than R2,000.
- R1,495 feels more affordable than R1,520.
Small differences can influence booking decisions, especially when guests are comparing multiple properties side by side.
Why Price Pointing Is Effective
Price pointing works because it reduces decision friction and aligns pricing with what guests naturally see and think of value.
Key reasons it is effective include:
- Left-digit bias: Guests focus more on the first digit than the full amount.
- Mental price thresholds: Prices are mentally grouped (for example, “under R2,000”).
- Familiarity: Common price endings feel intentional and trustworthy.
- Faster decisions: Clear price points make comparisons easier.
Common Types of Price Pointing
Psychological (Charm) Pricing
Prices typically end in 9 or 5.
Examples:
- R899
- R1,299
- R2,499
Best used when:
- Competing on booking platforms.
- Maximising conversions.
- Targeting price-sensitive guests.
Rounded Pricing
Prices are clean, whole numbers.
Examples:
- R1,500
- R2,000
Best used when:
- Positioning a property as premium.
- Simplicity and transparency are important.
- Reducing the “discount-driven” perception.
Tiered Price Points
Structured pricing steps between room types or offerings.
Example:
- Standard Room: R1,200
- Deluxe Room: R1,450
- Suite: R1,950
This approach helps guests easily understand value differences and encourages upgrades.
Anchor Pricing
A higher-priced option is used to make other options appear more affordable.
Example:
- Suite: R3,000
- Deluxe: R1,900
- Standard: R1,400
The higher price anchors expectations and improves perceived value of mid-tier options.
Price Pointing in Accommodation Pricing
In accommodation, price pointing plays an important role on booking platforms where guests compare many properties at once.
Instead of pricing a room at:
R1,780 per night
A property might choose:
- R1,795 to stay below a common filter threshold.
- R1,699 for stronger conversion appeal.
- R1,800 for a more confident, premium position.
These small adjustments can improve visibility, click-through rates, and booking confidence.
When to Pay Extra Attention to Price Pointing
Price pointing is especially important when:
- Listing on OTAs like Booking.com, Expedia, or Airbnb.
- Applying discounts or promotional offers.
- Managing low-occupancy periods.
- Competing within a similar price range or market segment.
Price pointing is not about lowering prices, but about presenting prices strategically. By choosing familiar, psychologically effective price points, accommodation providers can improve conversions while maintaining control over revenue.