Prices ending in 9, 99 or 999 :(
Why are so many prices ending in 9, 99 or 999?
---" I mean, is there a study proving that if you sell a software for $29, you will get significantly more sales than if you sold it for $30 ?"----
If you dislike the irrationality of such prices, you'll *really* dislike other interesting facts about people's purchasing habits. For example, changing the color or shape of packaging makes a difference, too. Signs that say "Sale" make a difference, regardless of an item's price. Advertisements that claim a sale bring more people in than ads that don't. These things have been proven in studies, but my wife has also seen them on a day-to-day basis at her store.
Phillip J. Eby
These studies were done on mail-order catalogs several years ago. One I studied in my marketing class was the price for a certain dress.
I consider myself to be very 'aware' of these sort of influences.
An Aussie Chick
There is actually another reason for these prices. It was so that sales staff *had* to work the cash register so that the customer would get their change. Otherwise, it would be far too easy for the sales staff to just pocket the sale.
That may be another reason. But I really doubt it's the only, or even primary one. My wife has done *lots* of pricing experiments in her store, and there are some prices that just sell better. Sort of like the whole 39/45/49 price mentioned above. Sometimes a higher price sells better than a lower one, if it's a more "normal"-sounding number.
Phillip J. Eby
in one of those "ZIG ZIGLER'S KEYS TO SELLING" type books at barnes and noble, the author says that any price with a "7" in it will outsell those without.
I'm aware of these things to, but catch myself saying "It's only four bucks" sometimes when it's $4.99 and I'm not thinking.
Interestingly my wife rounds down when we're discussing something she wants, and up when it's something I want. :-)
If someone (Stephen?) has a reference to a specific study about this "9" business, let me know. I work in retail now, and most of our prices end in ".99" (the prices were set by the previous manager). I was going to round them up, because I'm irritated by this somewhat underhanded attempt to make the item appear less expensive than it really is. However, I might reconsider, if there is actually good evidence showing that this pricing strategy is effective. Thanks.
Alex, you've answered your own question. If it doesn't work, it's not devious.
My second year marketing prof (many moons ago) indicated that prices without any fractional portion i.e. $50.00 or $100.00 are used to achieve a perception of higher price, thus higher quality
Makes No Cents
Philo, I'd love to do an experiment, but it would take too much effort to gather any kind of rigorous data. I suspect that the effect -- if it exists -- would be fairly small and hence would be hard to detect over the noise.
It's a devil's trick. When you're buying something ending with 9.99, you're getting... Turn it upside down, and you'll see! :)
An interesting thread....
One of the not so interesting marketing jobs is pricing.
I saw an experiment on a TV show not long ago there they priced two identical items with different prices and put both next to each other in the store. I don't remember if it was a 9.99 kind of price but anyway, the more expensive item sold better than the cheaper one. Customers knew to explain that too as it seemed the expensive one was of better quality, although they were absolutley identical.
El desconocido mas famoso del mundo
Alex, just look at marktaw's comment above and you've got your answer.
When Bang & Olufsen -- a very expensive and stylish TV/Stereo/Phone/Speaker producer -- first launched their products, they picked moderate prices but found their sales slow.
This is most evident at US gas stations....unleaded gas $1.519 / gal, in Wilmington, NC...While clearly marked on the signs it is probably the most effective use since most people would say the gas costs $1.51 not $1.52
The current marketing theory regarding prices is, quite simply, that one must experiment with several prices and details.
Yesterday I was looking at Mappoint services again. They've changed their pricing - now they're MORE expensive ($15,000/year)
...or maybe that's just what they want you to *think*... ;)
Phillip J. Eby
I heard a story that KFC introduced a slight variant on their fries as an alternative, and they did poorly (hardly ever asked for). However when they charged a premium for them they sold better.
I worked for Laplink once when they hired this new clown to run the place. One of the (only) things he did was adjust the price from xx.95 to xx.99, because he wanted the extra 4 cents.
I used to shop at a video rental store that priced videos at $0.96, so that after tax, your total price was $1.00. That made life easier for buyer and seller because there was no extra change making.
I know wal-mart uses the last two digits as a code... like x.92 means clearance, below wholesale price, that sort of thing.
Perhaps the comment by Makes No Cents ("...prices without any fractional portion i.e. $50.00 or $100.00 are used to achieve a perception of higher price, thus higher quality") explains why some fancy restaurants list prices as "11" or "12.5", rather than "11.00" or "12.50" like they might, or "10.99" and "12.49" like chain places would do.
Hey, this was answered already in this thread....when something is marked $9.99, it's got to be rung up on the till, so that you get your 1cents change. The teller can't just pocket the $10. That's where it all started. Apparently.
Have you any documentary evidence for this claim?
"Hey, this was answered already in this thread....when something is marked $9.99, it's got to be rung up on the till, so that you get your 1cents change."
Brad Wilson (dotnetguy.techieswithcats.com)
I saw the 'Perveived Premium' in action when the Wife and I were buying a new electric tooth brush.
Spare heads. How illeterate am I?
"Almost nobody lives where there is no sales tax any more. "
There is an assertion that the .99 prices were based on trying to prevent salespeople from pocketing exact change without going through the cash register (like they could if something were, say, exactly $5 or $10).
Brad Wilson (dotnetguy.techieswithcats.com)
It is still unlikely that the total bill (including sales tax) of a single purchase would be a round number. Plus, the use of charging .99 has other benefits to perpetuate it.
In the UK, the price of an item on the shelf is what you pay at the cash register i.e. taxes are included in the displayed price. In North America local sales tax is added to the displayed price at the cash register. So something for $0.99 could be $1.06 when you actually pay for it.
>> I was just pointing out that sales tax sort of obliterates that theory. <<
The need to open the cash register/avodi employee pilfering is really pretty week, unless it can be backed up with some documentary evidence.
Doing something like putting half-price stickers on normally priced items is illegal in Australia. Recently a large music store in Adelaide was fined $40,000 or so for advertising a keyboard as "marked down" when the price had not changed.
I can tell you now, Angus & Robertson is in trouble then.
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