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

kenthendricks.com

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

#21

Post by esnard »

I realize that this post is old, but there are some errors in the revenue tables:

- Dress #1 revenues are swapped for the "$5 less" and "$5 more" columns. - Dress #4 units purchased are swapped for the "$5 less" and "$5 more" columns (from the study they've linked before the tables) - Dress #4 revenues are also wrong, even without considering the previous mistake

This doesn't change the conclusion of the paragraph that much (42% instead of 48%), but this doesn't inspire me much confidence for the rest of the article

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

#23

Post by throwawaysleep »

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…

> Integrity means a lot.

Does it? Has anyone priced out the premium integrity can command?

As anecdotally, it doesn’t seem to matter unless you have a sterling reputation. People with merely a good integrity reputation are better off selling it off until they are low ish integrity.

And if you compete on price, may as well abandon it entirely.

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

#24

Post by ghaff »

neilv wrote: post #20

I didn't see it mentioned, but there's sometimes another factor: When a store is selling things for .00 vs. ".99" (or any other fractional amount), I assume it's a premium-priced store. They sure aren't rounding down to those numbers. (Or, many times when I see .00 numbers, it's slightly upscale clothing stores, who're maybe using .00 to seem more upscale, but who also have near-constant significant "sales". So if I…

I’m not sure how much I see .99 at upscale or at least midlevel clothing stores but pricing like $199 is pretty common (as are sales).

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

#25

Post by iambateman »

I have an odd case on this question…

My business _buys_ tickets from people, so deals happen when we offer to give them $99 or $104 or whatever for their tickets.

I wonder how this psychology works when someone is offering to _pay_ you? Thoughts?

Do people like to receive money ending in a 9 as much as they like to give it?

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

#26

Post by ghaff »

II2II wrote: post #22
vsuperpower2020 wrote: post #13

[flagged]

Something to keep in mind is the tactic is very old. Baby boomers were telling their children of this tactic. It is likely that boomers learned of it through their parents.

Certainly it’s been near-universal with gas pricing for pretty much forever to tack on 99/100. Any station that didn’t do it would have most people punishing it in a price comparison. Of course, pricing like $0.99 is extremely common more generally.

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

#27

Post by elevatedastalt »

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…

what sort of software were you selling? Was it an app that is priced under 10 bucks? That would be very different from some enterprise software costing $500.

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

#28

Post by lucb1e »

Waterluvian wrote: post #7

The psychology is fascinating. I would have thought that $1 feels smaller than $0.99. Two nines feels heavy. But despite what my mom would say, I’m surely wrong if everyone else is doing it.

I feel the same way and thought about this in the past when trying to come up with a way to compare two subjective numbers. I can't calculate whether a clock with lit-up hands is 7% more valuable so I need to use subjective judgement and I didn't want the number itself to be influencing me in irrelevant ways. One of the options being just over a round number seems to influence me, and it's not even necessarily the 9-at-the-end effect: consider 253¤ versus 282¤ versus 312¤. Whether you pay 250 or 280 isn't a huge difference, but going for the one over three hundred... oof! (The prices are actually equidistant: each ~10% or ~30 currency units apart.)

I never found a solution, but one idea was to scale competing products to a range of, say, 13 through 17. That will never cross any round number boundaries and one also can't use shortcuts like "it's essentially a tenner". I think that's when I discovered that it's very often down to two options and that anything scaled down to a range of 13 and 17 will turn into... 13 and 17! Surprise! I was not the smartest teenager.

Have you, or has anyone else reading this ever noticed this or given it thought, or even found a workable approach?

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

#29

Post by mcmoor »

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.

I thought it's notorious that sometimes they also don't know what they're doing, being carried by trends and vibes. "Half the money I spend on advertising is wasted; the trouble is I don’t know which half"

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

#30

Post by OJFord »

iambateman wrote: post #25

I have an odd case on this question… My business _buys_ tickets from people, so deals happen when we offer to give them $99 or $104 or whatever for their tickets. I wonder how this psychology works when someone is offering to _pay_ you? Thoughts? Do people like to receive money ending in a 9 as much as they like to give it?

No surely the same logic applies so receiving $100 looks more better than $99 than it really is. (And $105 than $104.99, etc.)
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