The Neuroscience of Price

It was once my job to teach people about food labels. Really, the idea was to get people to think critically about what they were supporting with their money. “Organic,” for example, is a legally-defined term. In order to earn that label, USDA agents are testing your farm and the food coming out of it. But it costs money to get the organic certification. Your local farmer down the road might not use pesticides, but also might not see the point in paying for organic certification when he knows his customers personally and they trust him when he says he doesn’t spray his crops.

And then there’s “all natural.” All natural is not a legally-defined term. All-natural chicken usually includes a line on the packaging about “no added hormones.” That’s true, but no chickens raised in the US have added hormones. Arsenic is all natural—it doesn’t mean it’s good for you. The all-natural label on food packaging doesn’t mean very much. It’s mostly just a way to get people to pay more. And I fall for it every time.

In my heart of hearts, I know that the all-natural option is not better or healthier, but my stupid emotional brain can’t resist it. And when it comes to price, the brain is even worse.

THE BRAIN WANTS WHAT IT WANTS

We think of the brain as the rational organ, but as far as organs go, it’s the biggest drama queen of all. Before you even have a second to think through a choice that you’re making, your devious brain has already made it for you. A 2025 study published in Frontiers in Human Neuroscience reports that people have dedicated neural circuits for evaluating price.

Researchers used electroencephalograms (EEGs) and magnetoencephalograms (MEGs) to measure what happens in the brain when people look at products with different prices. They found there is a specific brain response known as N400 that gets triggered when the price does not match expectations. It happens in a region of the brain that is responsible for value judgement and reward prediction.

N400 reactions have been studied for things like word association. Electrical activity in the brain peaks when the brain is having trouble processing something. If I show you a picture of ice cream and the word “gross,” there would be an N400 brain response because the image and the word don’t match (unless you don’t like ice cream, in which case you’re a sociopath).

There are two big takeaways here. One is that the reactions to price were different in terms of their neural signatures from their linguistic counterparts. In other words, the brain has a unique and specific reaction to price mismatch. Second, it’s called N400 because it happens within 400 milliseconds of exposure. That is faster than conscious thought can occur. There is a specific function in your brain dedicated to sending you subliminal messages about pricing. I told you. The brain is a meddling drama queen.

THE BRAIN IS A WINE SNOB

So, your brain makes snap judgements. It can’t help it. But surely when you experience a product or service for yourself and are able to judge its true quality, your brain will readjust.

Nope.

A 2008 study tested how varying wine prices alter perception of the wine itself. Participants were presented with five wine samples with accompanying prices. In actuality, only three wines were being used. Two wines were being presented twice at different price points. Not only did participants report enjoying the higher priced wine more, but the neural activity was different for the same wine at different prices. It’s not that people want others to think they know good wine. It’s that the price of the wine causes you to taste the wine differently. Your brain’s subconscious price associations impact how you experience the world.

In a different study, participants were given a drink claiming to be a “high-performance energy supplement” while performing word puzzles. For some of the participants, the bottle had a discount tag on it. The group with the discounted drink performed significantly worse on their puzzles. It’s another example of your brain’s subconscious price associations impacting your actions and capabilities.

The participants in the energy-drink experiment even reported that they weren’t aware of the price of the drink. Were they aware and they claimed they weren’t? Had they really not consciously noticed the discount tag? What is even real anymore? Your brain is bending reality, so who even knows?

GETTING THE BRAIN ON YOUR SIDE

There’s no stopping the brain from having immediate, subconscious responses that shape your decisions and those of your prospects. Working against its impulses does not work, so let’s look at how you can make the brain’s impulsive choices work for you when it comes to pricing.

Bundling
Bundling items together in an offer can keep the brain from immediately reacting to price. $500 per seat per month might seem like a high price for your SaaS product. But what if you charge $650 per seat per month for your SaaS product, two training sessions, and five custom templates? The brain doesn’t have a preconceived notion of what those three things cost together, so it won’t have an immediate reaction.

Order of Presentation
The order that people receive information impacts their ultimate decision. If you see a product before its price, your brain is prompted to ask, “Do I like this product?” If you see the price before the product, your brain asks, “Is this product worth it?” Which order you choose depends on the situation. Say you’re selling an expensive electric toothbrush. You better show the value it provides before you share the price. Once the toothbrush is in the cart, however, maybe you offer the customer their pick of an extra item for only $5. They would never have considered a toothbrush cover before, but now they’re not thinking “Do I like this toothbrush cover?” Instead, they’re asking, “Is this toothbrush cover worth $5?” Congratulations! You’ve just sold a toothbrush and a toothbrush cover.

Price perception
We’ve written before about the decoy effect. It’s why your choice between two items often changes when a third item (the decoy) is added to the mix. You haven’t changed the price of the 14 oz. coffee; you’ve changed how the price is perceived. Studies also show that by removing the dollar sign from a price, people tend to spend more. The symbol alone (or the lack of it) changes their price perception.

Decreasing Prices
We’ve also written before about the anchor effect. The first price someone sees for something impacts how they see every subsequent price. That’s why any menu of options should have the highest-priced item at the top. People will end up spending more than if the menu started with the lowest-priced item first.

Brains are a lot like toddlers and teenagers. They are stubborn, and there’s no convincing them of doing something. Instead, you have to be creative about how you present options and make them think their choice was completely their idea. Follow me for more parenting hacks.

We can’t help you with your toddler or your teenager, but we can accelerate your sales cycle. You can reach us at mastery@maestrogroup.co for more information.