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Prices ending in 9, 99 or 999 :(

Why are so many prices ending in 9, 99 or 999?

Examples of prices $ 9.90, $98, $399, etc. :-(

When I compare prices, I always round such prices up, and I'm angry at the people who set the prices like that, and force me to do an extra mental operation.

Do these prices work?

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 ?

Jake
Thursday, September 04, 2003

---" 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 ?"----

Yes

Stephen Jones
Thursday, September 04, 2003

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. 

Apparently, human beings are not rational.  On the positive side, it means that you can make more money by paying attention to details.  :)

Phillip J. Eby
Thursday, September 04, 2003

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.

If they priced the dress at $39.99, they got a certain number of sales.

If they priced the dress at $45, they got fewer orders.  That makes sense.

Then they priced it at $49.99, and sales went back up.

So yes, the .99 trick works.

Ankur
Thursday, September 04, 2003

I consider myself to be very 'aware' of these sort of influences.

Aware, but still human, and I always have a laugh at myself when I find myself reaching for something purely based on an irrational value (such as 1c less, or based on color, and yes shape of packaging!!). My husband and I oftern have a giggle when we are doing our weekly shopping and purchase a more expensive item based purely on some superficial value....still tend to buy it though, life is perhaps too short to take it all too seriously.

An Aussie Chick
Thursday, September 04, 2003

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.

Or so I have been told.

LesC
Thursday, September 04, 2003

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.

On the positive side, she's effectively narrowed it down to a list of "acceptable" prices that things can be (i.e. prices that sell), and then simply selects the largest one that the market will bear for the item.  :)

Phillip J. Eby
Thursday, September 04, 2003

Phillip,

Do you see any pattern to these prices that sell?  If so, would you please share them? Thanks!

Scot
Thursday, September 04, 2003

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.

rz
Thursday, September 04, 2003

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.

www.marktaw.com
Thursday, September 04, 2003

Interestingly my wife rounds down when we're discussing something she wants, and up when it's something I want. :-)

Dennis Forbes
Thursday, September 04, 2003

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 Chernavsky
Thursday, September 04, 2003

Alex, you've answered your own question. If it doesn't work, it's not devious.

But since you can change prices at will, why not experiment? Let us know what you find out.

[Note from Alex in a few months: "I discovered that randomly changing prices all the time gets you fired"]

Philo

Philo
Thursday, September 04, 2003

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

As such, high end retailers use this strategy to to just the opposite effect of what has been described above.  They want to make the purchaser feel that they are buying an exclusive item.

A case in point:  I was at a local mall the other day that has a GAP store and Tommy Hilfiger store next to one another.

Pants at Tommy Hilfiger: $75.00
Pants at the GAP : $69.99

Makes No Cents
Thursday, September 04, 2003

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.

Alex Chernavsky
Thursday, September 04, 2003

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! :)

steelkid
Thursday, September 04, 2003

An interesting thread....

More than once I when I was shopping I bought the more expensive choise because the cheaper looked .... too cheap. At such times, I question my being rational.

char* full_name()
Friday, September 05, 2003

One of the not so interesting marketing jobs is pricing.

Yes an ending 9 will allow you to pretend the product is cheaper than it is.  In EC countries that price needs to include VAT if its a retail sale because that's the way it is, wholesale or business pricing can show the goods value and then the VAT on top of that.

Simon Lucy
Friday, September 05, 2003

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.

So yes, there is a lot of psycology in pricing.

El desconocido mas famoso del mundo
Friday, September 05, 2003

Alex, just look at marktaw's comment above and you've got your answer.

Stephen Jones
Friday, September 05, 2003

Stephen,

I would still like to see a study (or studies).  Marktaw's comment is interesting, but introspection isn't reliable.  Otherwise, we wouldn't need to do double-blind, placebo-controlled studies to test drugs.  We could just ask people if they thought the experimental medicine was helping them.

Alex Chernavsky
Friday, September 05, 2003

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.
So instead, they practically tripled the price of their products, giving the "rich" people the idea that the product was aimed at them exclusively, thus they sold a lot more.
They still price their products this way.

Mickey Petersen
Friday, September 05, 2003

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

apw
Friday, September 05, 2003

The current marketing theory regarding prices is, quite simply, that one must experiment with several prices and details.

The factors influencing pricing optimization are too complex and too random, so there is no theory around them, other than the fact that you must test, test, test with different prices and so find the one that brings in the most profit.

But, studies about prices like 9.99 $ should have been done a long time ago, and results should be available to us now.

Jake
Friday, September 05, 2003

Yesterday I was looking at Mappoint services again. They've changed their pricing - now they're MORE expensive ($15,000/year)

At that price, I think only bighuge companies can afford it - and almost nobody is going to pay that for "find our nearest branch". Or so you'd think. But obviously if they've raised their price during this IT slowdown, they must be doing well.

Philo

Philo
Friday, September 05, 2003

...or maybe that's just what they want you to *think*...  ;)

Phillip J. Eby
Friday, September 05, 2003

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 have certainly witnessed the 'perceived value' effect in community theatre. A show where the tickets cost a small amount will often be better attended than a free show.

David Clayworth
Friday, September 05, 2003

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.

Priceless.

Clutch Cargo
Friday, September 05, 2003

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.

It's common now for stores to advertise no-sales-tax "sales", which a similar idea.

runtime
Friday, September 05, 2003

I know wal-mart uses the last two digits as a code... like x.92 means clearance, below wholesale price, that sort of thing.

I remember an example where a woman who sells jewelry in New Mexico told her employees to put half price stickers on everything, and they did.. Sales went through the roof. Why? Well, they didn't mark anything down, they just said the labelled prices were half what the regular price is, so people thought they were getting really good jewelry at a nice price.

Anyway, this doesn't answer the x.99 question.

A google search for (99 cent pricing study) turned up this as the first link:

... 2000 Rutgers University study found that
people reading an advertisement for a dress were more likely to judge
it as relatively low-priced -- and lower in quality -- when advertised at $49.99 rather than for a penny more, $50.00, even when everything else in the ad remained the same.

Any time someone has a price ending in .00 it strikes my eye, it seems more boutique and less like everyone else who you assume is just trying to trick you somehow. Of course, this is because of the perception that .99 prices are some sort of marketing trick... The question is, who came up with it? And why did it stick?

www.marktaw.com
Friday, September 05, 2003

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.

Exception guy
Friday, September 05, 2003

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.

Knowledge Maker
Friday, September 05, 2003

Have you any documentary evidence for this claim?

Stephen Jones
Friday, September 05, 2003


No clear answers, but many references in this paper:

http://marketing-bulletin.massey.ac.nz/article8/research1b.asp

GP
Friday, September 05, 2003

"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."

Almost nobody lives where there is no sales tax any more.

Brad Wilson (dotnetguy.techieswithcats.com)
Friday, September 05, 2003

I saw the 'Perveived Premium' in action when the Wife and I were buying a new electric tooth brush.

There were two on offer in the exact same range.  One was £19.99 and the other £29.99.  Can't remember the exact prices, but there was definately a £10 difference. 

The Wife wanted to go for the £29.99, since that was what we had budgeted and it must be better.

Being a programmer, I decided to compare the actual difference.  The difference was:

1)  A charging indicator

2) 2 space heads.

That was it.  A pack of 3 replacesment heads was just £3 and who needs a little green led to tell you its plugged in.

Even after I pointed this out, the Wife still wanted to go for the more expensive toothbrush.

Ged Byrne
Friday, September 05, 2003

Spare heads.  How illeterate am I?

Ged Byrne
Friday, September 05, 2003

"Almost nobody lives where there is no sales tax any more. "

Sorry, but I didn't understand the relationship with the .99 topic ?

GP
Friday, September 05, 2003

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).

I was just pointing out that sales tax sort of obliterates that theory.

Brad Wilson (dotnetguy.techieswithcats.com)
Saturday, September 06, 2003

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.

When I once worked as a cashier, it was obvious that a round purchase was scammable.

anon
Saturday, September 06, 2003

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.

UI Designer
Saturday, September 06, 2003

>> I was just pointing out that sales tax sort of obliterates that theory. <<

I believe that .99 pricing predates the general existence of sales tax by far. 

The story I'm familiar with is that one of the famous American retailers (Wanamaker?) began the practice because he wanted to hear the sounds of cash registers opening and see change being passed for every transaction. 

SomeBody
Saturday, September 06, 2003

The need to open the cash register/avodi employee pilfering is really pretty week, unless it can be backed up with some documentary evidence.

Any fractional figure will result in change being given; th e.99 figures in fact cry out for the assistant to keep lots of one cent pieces in his pocket.

What is clear enough is that whatever the reasons some retailers emobraced it, the practise continues to this day because it suggests a lower price.

Stephen Jones
Sunday, September 07, 2003

<quote>
Almost nobody lives where there is no sales tax any more.
</quote>

Its official. All Australians are nobodies. ;-)

We don't have any (visible) sales tax. We pay the price on the sticker.

Matthew
Sunday, September 07, 2003

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.

Daniel S
Sunday, September 07, 2003

I can tell you now, Angus & Robertson is in trouble then.

I work in Melbourne CBD at the moment. A book (I believe it was 3DS Max 4 Unleashed or something like that) was selling for something like $79 in Geelong (where I live) but was selling for $99 less 20% discount in Melbourne. Both of these were A&R stores. There's three major bookstores right near each other, A&R, McGills and the Technical bookstore, and they're all constantly in "Sale" mode, but their "Sale" prices are the same price as the "regular" prices in Geelong.

So I wouldn't wet your pants about the "half-price" law bit.

Geoff Bennett
Monday, September 08, 2003

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