A Penny Saved: Psychological Pricing
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A Penny Saved: Psychological Pricing
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Re: A Penny Saved: Psychological Pricing
#2I would love a once-and-for-all answer on this topic. Hell, even a rule of thumb like "If you are positioning your product for the mid to high end market, go with X"
Re: A Penny Saved: Psychological Pricing
#3That's the Anchoring Effect. It's not just about 3.99 appearing cheaper than 4.00. It appears cheaper than 3.00 because the 9's make the 3 look small.
$3.29 appears especially cheap. The cheapest-looking price point between $3 and $4 is probably $3.19 or $3.29. ($3.09 isn't as cheap-looking, because the '0' adversely anchors the 3.
There is a trade-off in the appearance of simplicity, of course. If you're selling cars, for example, you get more mileage (no pun intended) out of $29,500 than $29,999.99. Restaurant menus are one example of that, wherein whole numbers ending in '8' and '6' seem to be favored (18, 28, 36).
Re: A Penny Saved: Psychological Pricing
#4I love buying when prices are quoted in even amounts, especially if they include the tax. It makes me sad that we humans are so affected by tactics like this and that sellers (rationally) take advantage of them.
Re: A Penny Saved: Psychological Pricing
#5Interestingly, in Australia where taxes are in the sticker price, most retail prices are .99 or .95. When I was in the US, where the taxes mean you have no idea what the checkout price will be, it was weird to see so many prices at .29, 39, .59 and so on.
I assume it was tax-related, because forking over cash and getting shitty amounts of coins back is not something that's common in Australia, but a necessity of the way Americans do retail - and a .99/.95 regime helps avoid that. There's no 'leave a penny/take a penny' tray in Australian retail culture, for example. This reasoning is admittedly idle speculation, IANARetailer.
Re: A Penny Saved: Psychological Pricing
#6I love buying when prices are quoted in even amounts, especially if they include the tax. It makes me sad that we humans are so affected by tactics like this and that sellers (rationally) take advantage of them.
Me too. I know I'm in the minority with this, but I much prefer to do business (repeatedly) with a firm that isn't employing bullshit tactics. It would be interesting to see a study that reflects the whole cost-per-customer, since resorting to such pricing tricks means you're inevitably attracting consumers who are extremely price driven and who may be harder to upsell or retain.
Re: A Penny Saved: Psychological Pricing
#7British supermarkets have plenty of products priced at round pounds, or £x.50. This is particularly the case with BOGOF deals, e.g. two packets of cheese might cost £3 whereas individually they may cost £1.89 each. Why is this?
There are two reasons. The round price is an honest price, nobody has tried to fiddle the price to look less than it is by putting the 99 in there. Secondly, for those shopping to a budget, e.g. not planning to spend more than £20, then it is a lot easier to add up round figures than lots of £x.99's.
The one that I don't understand is £x.95. Why would a retailer want to put (say) a thousand items through the till at £x.95 when they might as well be £x.99? 1000 * 4p is £40. That might not seem a lot of money, however, at minimum wage(!), that is enough for some extra pair of hands on a busy Saturday.
With online retail a lot of websites charge round figures for delivery and services such as gift wrapping. I can see the sense in that, however, it would be good to see an A/B test from a major retailer to see if getting that wrong means more customers bailing out at checkout.
Re: A Penny Saved: Psychological Pricing
#8I would love a once-and-for-all answer on this topic. Hell, even a rule of thumb like "If you are positioning your product for the mid to high end market, go with X"
That's why A/B testing is always a good idea. Try it both ways and see which converts better.
Re: A Penny Saved: Psychological Pricing
#9I would love a once-and-for-all answer on this topic. Hell, even a rule of thumb like "If you are positioning your product for the mid to high end market, go with X"
That's why A/B testing is always a good idea. Try it both ways and see which converts better.
I'd love to but I don't have enough traffic to conclude this in faster than like, a year.
Re: A Penny Saved: Psychological Pricing
#10I don't know about this. The post compares items where the seller chooses to price at whole numbers versus where the seller chooses to subtract a penny. It seems to me like a more likely explanation is that less savvy sellers who produce lower quality products are more likely to price at whole numbers. A 100% jump in conversion based on a change of 1 penny seems kind of absurd to me.
If anyone has done controlled tests of this effect and seen comparable results, I'd love to hear about it.