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People spend more when prices end in .99 (2018)

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Re: People spend more when prices end in .99 (2018)

#101

Post by ChrisMarshallNY »

tracerbulletx wrote: post #11
throwaway13337 wrote: post #9

I never like thinking of pricing in this way. When you price something as $9.99, you're signaling to your customer that you're trying to manipulate them. Whereas a flat $10 is honest. Integrity means a lot. The software I sell is priced in whole numbers. However, the magnitude of effect claimed in the article is huge. It's the difference between selling at cost and a huge margin. Between doing well and shutting down…

Retailers don't do this because of published studies. They do it because they've tested it internally for the last 40 years.

Yup. It's been settled lore, for retailers, as long as I can remember. I don't think they care about metrics.

That doesn't cheapen metrics, however. Some pretty meaningful (and, often, annoying) stuff has come from them.

Re: People spend more when prices end in .99 (2018)

#102

Post by lsaferite »

FpUser wrote: post #19

I am curious why. When I see the .99 style pricing I immediately round it to the closest number that makes sense to me. Also unless I am buying large quantity I do not really care whether it is $9 or $10

My assumption is that _most_ people anchor to the $9 in $9.99 and don't mentally round to $10. Me, I mentally round up and appreciate companies that use nice round numbers.

Re: People spend more when prices end in .99 (2018)

#103

Post by Sightline »

seydor wrote: post #100
throwaway13337 wrote: post #9

I never like thinking of pricing in this way. When you price something as $9.99, you're signaling to your customer that you're trying to manipulate them. Whereas a flat $10 is honest. Integrity means a lot. The software I sell is priced in whole numbers. However, the magnitude of effect claimed in the article is huge. It's the difference between selling at cost and a huge margin. Between doing well and shutting down…

To me .99 signals that you care for affordability. Luxury products don't care about that. That's why apple's pricing looks odd to me. Expensive prices minus one dollar

That's not affordability, that's tricking someone into buying something that they wouldn't have otherwise.

Re: People spend more when prices end in .99 (2018)

#104

Post by mike_hock »

seydor wrote: post #100
throwaway13337 wrote: post #9

I never like thinking of pricing in this way. When you price something as $9.99, you're signaling to your customer that you're trying to manipulate them. Whereas a flat $10 is honest. Integrity means a lot. The software I sell is priced in whole numbers. However, the magnitude of effect claimed in the article is huge. It's the difference between selling at cost and a huge margin. Between doing well and shutting down…

To me .99 signals that you care for affordability. Luxury products don't care about that. That's why apple's pricing looks odd to me. Expensive prices minus one dollar

Plenty of stuff worth $3 sold for $9.99

Nobody trying to sell anything "cares for affordability" any more than if it's not affordable to the customer, he won't buy it.

Re: People spend more when prices end in .99 (2018)

#105

Post by kevin_thibedeau »

throwaway13337 wrote: post #16
tracerbulletx wrote: post #11

Earlier quoted context omitted.

Retailers don't do this because of published studies. They do it because they've tested it internally for the last 40 years.

That may be true but we don't know that it is true. When I started my selling software, I priced with something.99 too. I did this because everyone else did. I was unfamiliar with these sorts of things so I followed on. I am sure that in some business at some point, there was a big positive in switching to that sort of pricing. When I switched my software to whole numbers, I did not notice a drop in sales. Things con…

The final answer here gives clear indication of psychological bias toward left digits:

https://skeptics.stackexchange.com/questions/2359/the-origin...

Re: People spend more when prices end in .99 (2018)

#107

Post by phito »

tracerbulletx wrote: post #11
throwaway13337 wrote: post #9

I never like thinking of pricing in this way. When you price something as $9.99, you're signaling to your customer that you're trying to manipulate them. Whereas a flat $10 is honest. Integrity means a lot. The software I sell is priced in whole numbers. However, the magnitude of effect claimed in the article is huge. It's the difference between selling at cost and a huge margin. Between doing well and shutting down…

Retailers don't do this because of published studies. They do it because they've tested it internally for the last 40 years.

Yep it's not science, but engineering

Re: People spend more when prices end in .99 (2018)

#108

Post by mike_hock »

munchler wrote: post #91

> traditional economics predicts that raising a price results in fewer units—and fewer units, even at a higher price, means less revenue This is false and a very basic mistake. Sometimes higher prices lead to more revenue, even with fewer units sold.

In this case it certainly does, since the price is less than 1% higher for items priced above $1, .1% above $10, etc.

Re: People spend more when prices end in .99 (2018)

#109

Post by dahart »

It’s curious that the “studies” cited all have wildly differing outcomes. It makes the first example given with a 48% increase seem very questionable and possibly misleading, when all the others are single-digit increases at best. How much more do people spend? Is there a stronger meta analysis somewhere?

The bottom of the article launches into spoken number frequencies. The caption under the digit frequencies plot claims “the decreasing frequency of numerals is due to the organization of our mental representation of quantities.” This seems to be simply Benford’s law, and the plot of numbers across languages suggests the same. Assigning this to some mental process or cognitive bias for small numbers seems like it might be inventing an incorrect explanation.

https://en.wikipedia.org/wiki/Benford%27s_law

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