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People spend more when prices end in .99 (2018)
- lupire 2y agoYes, that's why .99 was invented and survived.
- optimalsolver 2y agoIt reminds them of 1999, objectively the greatest year in human history.
- underlogic 2y agoFirst job for all day AR glasses is to kill off this nonsense. Superimpose the rounded up price and blur the advertising out. Also add the markup so the customer knows that $2 Arizona iced tea was bought for 35c.
- iLoveOncall 2y agoActual first job for all day AR glasses will be to spam you with ads everywhere.
- add-sub-mul-div 2y agoThat's not just a flippant reply. The fundamental purpose of invention in our society is no longer about benefitting our lives. If they invented consumer travel to Mars tomorrow I'd have no interest. In 2024 it would be stupid to believe the customer experience would take the form of anything better than the Star Wars hotel.
- apantel 2y agoThe “fundamental purpose of invention in our society” has been for military advantage more often than not.
- johnnyanmac 2y agoYou can call it marketing if you're really cynical. What client has more money than the government, and the budget to spend in the trillions?
- Nextgrid 2y agoSee Hyper Reality: https://www.youtube.com/watch?v=YJg02ivYzSs https://www.youtube.com/watch?v=YJg02ivYzSs
- Waterluvian 2y agoI had always daydreamed of the inverse. A world where we get rid of road signs because the cars HUDs fill them in for us. But there’s some grotesque likelihood to the idea that the world ends up positively littered and we use technology to filter it out.
- Sarkie 2y agoMcDonald's knew about this many years before 2018
- OJFord 2y agoI think everyone did... (In fact the linked study - the link is broken, but it's available here [0] - is from 2003.) [0] - https://www.kellogg.northwestern.edu/faculty/anderson_e/htm/PersonalPage_Files/Papers/Effects_of_9_Price_Endings_on_Retail_Sales.pdf https://www.kellogg.northwestern.edu/faculty/anderson_e/htm/...
- Waterluvian 2y agoThe 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.
- lucb1e 2y agoI 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?
- pitaj 2y agoIt's really about the leading digit being one less. Our intuitive sense of quantity knows that 1X is always greater than 0Y, and that on average given random X and Y, 1X is three times 0Y. Our mind is a superposition of intuitive sense and reason, so even when we can reason that they're very close in price, our intuitive sense still plays into our decision-making. That's my theory anyways.
- IggleSniggle 2y agoI think it does feel smaller, but only if you always leave off the cents. $0.99 feels smaller than $1.00, but $1 feels smaller than $.99 or 99¢
- Detrytus 2y ago
- throwaway13337 2y agoI 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 your business. Given the replication crisis is worst in these types of studies - the kinds of studies that beg to be the subject of TED talks - you have to wonder how reproducible these effects are. Are we selling our integrity for bad science? https://en.wikipedia.org/wiki/Replication_crisis https://en.wikipedia.org/wiki/Replication_crisis
- add-sub-mul-div 2y ago> Are we selling our integrity for bad science? Are we selling our inner peace for outrage over minor things?
- tracerbulletx 2y agoRetailers don't do this because of published studies. They do it because they've tested it internally for the last 40 years.
- throwaway13337 2y agoThat 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 continued to grow. Of course, my business is one data point and a small one. How much of why we tend to do this is because, historically or normally, that is how we've seen it done?
- elevatedastalt 2y agowhat 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.
- YVoyiatzis 2y agoActually, the .99 price-point started as a clever way to prevent theft, manage inventory, and keep track of sales. The idea was that pricing something at $1.00 might tempt a cashier to pocket the bill, but pricing it at $0.99 meant they’d have to open the register to give change, reducing the risk. Back then, most registers didn’t print receipts. This method also helped with inventory control. For example, if the total sales for the day ended in .56, it meant 44 (or 144) items were sold, no matter how many customers bought them. This pricing strategy stuck around because it was really useful for running a business smoothly.
- PullJosh 2y agoI don’t know if this is true or not, but it’s clever and interesting regardless.
- OJFord 2y ago> This method also helped with inventory control. For example, if the total sales for the day ended in .56, it meant 44 (or 144) items were sold, no matter how many customers bought them. That seems like bollocks, who cares about a technique for tracking total number of any items sold? That isn't helpful for inventory management at all? And even if you had only a single product, or you totalled sales separately for some reason (and inexplicably by sale price rather than just tallying sales), you could then just divide by the price, you don't need to coerce the total into being a tally mod 100.
- johnnyanmac 2y ago>who cares about a technique for tracking total number of any items sold? Pre-digital calculator salesmen? Time is money and being able to do a quick mental math can be helpful before doing a more detailed inventory >you could then just divide by the price, you don't need to coerce the total into being a tally mod 100. That's why they gave more than one reason. Why laser focus on criticizing a single one?
- OJFord 2y ago
- deleted 2y ago[deleted]
- vsuperpower2020 2y ago[flagged]
- mike_hock 2y ago[flagged]
- II2II 2y agoSomething 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.
- ghaff 2y agoCertainly 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.
- jasomill 2y agoAnd just to be clear, gas prices tack on nine tenths of a cent, selling a gallon for, e.g., $3.999.
- chrisjj 2y agoLove to hear their explanation of how they are deceived.
- krispyfi 2y agoLLMs don't understand numbers but neither do people.
- FpUser 2y agoI 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
- jraph 2y agoI do this too (the rare times I'm at a place that does this) but that doesn't mean there's no adverse consequences. I would be interested if the effect still shows for people who consciously round up.
- lsaferite 2y agoMy 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.
- neilv 2y agoI 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 see a .00 without a large "sale" discount, then maybe I'm there the wrong day, or someone hasn't yet been around with the price sticker gun yet that day.) But when they're using fractional numbers, that says they're more likely targeting more pricing-sensitive buyers, and I'm also not paying for the upscale pretense.
- ghaff 2y agoI’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).
- robocat 2y ago> premium-priced I've seen this on menus and wine menus that write prices like 5 or 4.5 -- everything rounded to 50¢ or $1 -- I think trying to appear upmarket.
- Too 2y agoWhat does this theory tell us about MacBook Pro at $1,999?
- esnard 2y agoI 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
- iambateman 2y agoI 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?
- OJFord 2y agoNo surely the same logic applies so receiving $100 looks more better than $99 than it really is. (And $105 than $104.99, etc.)
- abraxas 2y agoIt's been a couple of decades since I last lived in the UK but I remember quite well that Marks & Spencer had rounded pricing (no .99 deception). I wonder if they kept it up and if they are still doing well over there.
- BensonGao 2y ago.99 is actually a pricing psychological strategy. Strangely, you won't often see this kind of pricing in offline retail stores, only during promotions. However, online and offline are different. When paying online, people's consumption psychology is more impulsive because you don't take out cash when paying; you just pay a number, and the money is deducted from your bank card. I still quite understand why online pricing is set at .99, because my own website also uses it haha.
- jraph 2y agoWhat? > Strangely, you won't often see this kind of pricing in offline retail stores, only during promotions I think I see this whenever I enter a regular supermarket. > When paying online, people's consumption psychology is more impulsive because you don't take out cash when paying; you just pay a number, and the money is deducted from your bank card People overwhelmingly pay by card at actual shops and rarely use cash. This may depend on the location of course.
- kerkeslager 2y agoThe kind of person who looks at this sort of thing and says, "Hey we should use this to manipulate people" is the kind of person our society needs less of. I'm sure Hacker News will have some earnest argument for why this form of competition is actually good for people.
- AgentOrange1234 2y agoI get where you are coming from. Books like Influence the art of persuasion and Thinking fast and slow wrestle a bit with the morality of studying this kind of stuff. It’s certainly possible to misuse the insights to manipulate others, but it’s also important to be able to recognize when and how you’re being manipulated.
- kerkeslager 2y agoI'm not criticizing the researchers--facts by themselves aren't moral or immoral. It's the people who use this sort of pricing model that I'm critical of. It's sort of a moot point though, given this method of manipulation is so deeply embedded in our economy at this point.
- johnnyanmac 2y ago> sure Hacker News will have some earnest argument for why this form of competition is actually good for people. Nope, the current consensus this time is HN assuming they know better than a researcher (and decades of business) and inserting their own opinions. >The kind of person who looks at this sort of thing and says, "Hey we should use this to manipulate people" is the kind of person our society needs less of. Ever since JC Penney, I grew apathetic. People want to be tricked, why ruin their fun?
- squarefoot 2y agoThis is on purpose. Our brain associates for example 9.99 closer to 9 rather than 10, therefore pricing something at 9.99 is like pricing it as 10 but advertising it as 9. It's pure and simple manipulation, which is what all sales techniques are based upon.
- chrisjj 2y ago> They ran the experiment for two days. During this time, 241 people bought cheese. When they saw .00-ending prices, they bought cheese 44.1% of the time. But when they saw .99-ending prices, they bought cheese 51.2% of the time. > This study not only confirmed that .99-ending prices lead to more revenue Er, surely that depends on the rest of the price e.g. 1.00 v 1.99.
- ThatMedicIsASpy 2y agoThe only price I ever compare and look at is €/gram €/liter. For my cheese that would be 6-8€/kg
- chrisjj 2y ago> €/gram €/liter And when you see 0.99 €/gram ? :)
- moritzwarhier 2y agoThis is a thing in Germany, e.g. one large grocery chain sells "premium" tomatos for prices like "1.99€/100g", which makes intuitive comparison hard for some, especially because those who look for prices per mass usually compare kilo prices, and most are just used to 200g or 350g trays, sometimes a pound, not comparing prices per weight at all.
- everdrive 2y agoI don't have any evidence for this, but intuitively it feels like this must be true for much of the bell curve of humanity. In other words, it probably doesn't work very well for some sets of folks. It's very easy to look at $18.99 and mentally think "$20 once taxes hit," which ought to dispel the illusion. It makes me wonder if there are some market segments which intentionally avoid this sort of trick since it is either ineffective or offensive to their customers. Sort of like how Wal-Mart doesn't generally sell luxury products, but in reverse.
- gsuuon 2y agoI think it matters for the audience who's looking at that first number - so if $20 isn't a lot to you, you wouldn't care that it's $19. Comparable to a $1599 macbook pro. I think if there wasn't a positive effect on sales, large corps would've dropped it long ago.
- mike_hock 2y ago> It's very easy to look at $18.99 and mentally think "$20 once taxes hit," which ought to dispel the illusion. What illusion? One possible explanation is that .99 prices are so well established that prices that don't end in 99 stand out, prompting a more conscious analysis by the customer. If round prices were the norm, it would work the other way. Similarly, if prices always ended in .01, those that didn't would stand out.
- mbs159 2y agoIn many countries in Europe the price of products is always written including tax.
- AnthonBerg 2y agoFree business idea: VR glasses that turn $x.99 price markings into $(x+1).00. The glasses cost $x.99.
- tromp 2y ago> Stevens Power Law says that to double the perception of brightness, add 4 times more wattage. Interesting fact, but I wished they wouldn't use the confusing formulation of "adding 4 times more" which sounds to me like a five-fold increase.
- thecompilr 2y agoIn the US gas prices at gas stations usually also show a tiny 9/10 of a cent in addition to the x.xx price, i.e. actual price is x.xx9 and I have never seen any other value for that 3rd decimal place
- krustyburger 2y agoExcept of course for Donny’s Discount Gas.
- Mountain_Skies 2y agoThat 1/10th of a cent savings might have looked good when gasoline was 39.9 cents but it's a constantly shrinking share of the cost of a gallon of gas that might psychologically be making the number look bigger as it is more digits. But since everyone does it, no one has an advantage or disadvantage because of it. Maybe when gas gets above $10/gallon gas stations will decide it's better to drop the 9/10th than to purchase new signage and pumps that can handle an additional digit.
- munchler 2y ago> 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.
- mike_hock 2y agoIn this case it certainly does, since the price is less than 1% higher for items priced above $1, .1% above $10, etc.
- komodus 2y agoA macbook air at $999 is always more attractive than one at 1000, 1015 or 1021. After taxes sure it will go over 1000 but usually when we're browsing for prices first impression always matter
- dahart 2y agoIt’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 https://en.wikipedia.org/wiki/Benford%27s_law
- bobse 2y ago[dead]
- mo_42 2y agoExcept for products where the price is itself a feature. For example a Luis Vuitton hand bag. They show round prices like 2k or 3k.
- simonmysun 2y agoOne of my friends always say e.g. a 29,99€ item as "over 20€", while I directly round them up. It has caused several cases of misunderstanding because when I mention something costs 30€ he can't match the 29,99€ item in his mind. I believe thr number perception can be trained and proper calculated can be attached to the moment a number is seen.
- nottorp 2y agoI wonder. Prices ending in some number of nines have been around for a hundred years or more now. Perhaps we're so used to everything priced ending in 9 that we now subconsciously think that anything not priced in 9 has something wrong with it?
- SergeAx 2y agoWhen counting my share of the restaurant bill, I always have to make a cognitive effort to round all prices up one last digit. However, when visiting a restaurant, I don't care about individual prices; I can easily see the restaurant's "price grade" by looking at several menu items. These mind tricks make me sad.
- fennecbutt 2y agoWell, 69% of people believe completely made up statistics without doing any of their own fact checking, so I'm not that surprised.