Ever wonder why some prices just feel wrong? When you see a luxury watch for $19.99 or a pack of gum for $20, your brain immediately knows something’s not right. It turns out there’s actual neuroscience behind this instinctive reaction.
A new study published in Frontiers in Human Neuroscience shows that our brains have a specific neural response to prices that don’t match our expectations. And I’m not talking about a vague feeling – I’m talking about measurable brain activity that lights up when pricing doesn’t make sense.
Your Brain’s Price-Checking System
Researchers conducted three experiments – two using electroencephalography (EEG) and one using magnetoencephalography (MEG) – to measure brain responses when participants viewed mobile phones (iPhones, Nokia, and Xiaomi) paired with prices that were either at market value, way below, or significantly above.
The key EEG finding? When prices were way off from what people expected, their brains produced a distinctive response called an N400 – a negative electrical deflection that peaks about 400 milliseconds after seeing the price. Think of it as your brain’s “that doesn’t compute” signal.
What’s even more interesting is that this N400 signal flips polarity depending on whether the price is too high or too low. Your brain processes “this is suspiciously cheap” differently from “this is ridiculously expensive” – but both trigger strong responses.
The MEG experiment took things further by pinpointing exactly which brain regions were doing this price evaluation. Two areas lit up consistently: the ventromedial prefrontal cortex (vmPFC) and the anterior cingulate cortex (ACC). These regions are central to how we evaluate worth and make value-based decisions. The vmPFC helps integrate benefit and cost signals, while the ACC is involved in reward-based learning and evaluating outcomes.
In other words, your brain has dedicated neural circuits that automatically evaluate whether a price seems “right” – and these processes happen in brain regions tied to reward, value perception, and emotional responses to gains and losses.
This study echoes the results of early “pain of paying” work done by George Loewenstein of Carnegie Mellon University and Brian Knutson at Stanford.
Why This Matters For Your Marketing
You don’t need a $2 million MEG scanner to apply this research. Here’s what it means for your business:
- Price anchoring is real – Your customers’ brains have actual neural mechanisms dedicated to comparing your price with what they expect to pay. When you violate those expectations too drastically, you trigger a neurological “warning signal.”
- New brands have pricing wiggle room – The study showed that for Xiaomi (which was newer to the market), consumers had a wider range of price acceptance than for established brands like iPhone. If you’re launching something new, you might have more flexibility in pricing before triggering those neural alarm bells.
- Price processing happens lightning-fast – The price-related N400 happens around 300-400ms – that’s about a third of a second. This is faster than deeper semantic processing. Translation: consumers make snap judgments about your pricing before they even consciously think about it.
- It’s emotional, not just logical – The research pinpointed activity in the ventromedial prefrontal cortex and anterior cingulate cortex – brain regions associated with value judgments and emotional responses. Pricing isn’t just a coldly rational decision; it’s tied to reward expectations and emotional reactions.
Testing Without The Brain Scanners
Not many of us have access to neuroscience labs, but you can still apply these insights:
- Survey customers about what they expect to pay before revealing your actual prices.
- Watch for hesitation or reaction time when people first see your pricing.
- For new products, test a wider range of price points to find the boundaries of acceptance.
- Pay attention to initial facial reactions when people see your pricing – remember, these responses happen in fractions of a second.
- In some cases, simple tools like A/B testing can help you determine the optimal price point.
Use Bundles to Avoid Price Disconnects
Brands sometimes use bundles as a way to avoid showing customers prices that might produce a negative reaction. For example, $3,000 for leather seats in a car might seem shockingly high if the customer mentally compares it to a much larger leather sofa that costs less. But, there’s no easy point of reference for a $6,000 “luxury package” that includes leather seats, a moonroof, a sound system upgrade, and other amenities.
The Bottom Line
Your customers have built-in price expectations, and their brains automatically flag big departures from those expectations.
If you’re drastically undercutting the market, you might trigger skepticism rather than excitement. If you’re charging premium prices without the perceived value to match, you’re fighting against hardwired brain responses.
The price isn’t always right – but you CAN get it right for your customers’ brains!
