The Psychology of Prices

What numbers sell best

[dpd1]

Over the weekend I recently recalculated all of the prices for our products. Some prices or shipping amounts actually went down after being re-calculated, but most went up. Some went up a very small amount, but looking back at it now, I'm rethinking whether I did the right thing or not... For about three years a number of our popular products were 68.95. I now raised them to 69.95 to try and make up for inflated costs. Obviously this isn't a big change, but I'm wondering what kind of psychological effect a change like this has on the customer. I think looking at the price 69.95 just looks a lot closer to $70 than 68.95. This sounds silly, but we all know that these kinds of things do have an impact on how people think. I don't think many people are stupid enough to believe there's a big difference between the two... I just think that in the back of people's minds, most realize that they're buying something they really don't need in the first place. When you have pricing like that, I think it helps the practical part of your mind rationalize it a little more easily. 'Hey, it's just $60... That's not bad'. Even though the logical part of your mind knows it's really $70.00.

At any rate... I'm thinking that if the difference between 68 and 69 means less people buying, it's maybe not worth the extra buck. Or maybe I'm over-thinking it. Just curious what other people feel about this kind of thing?

Dave

[King_Fisher]

As a old B&M retailer I can tell you that it shouldnt make any difference.

Traditonally the $0.95 is accepted by the consumer. We use to price products at $ 10.00 and $9.99. The $9.99 sold twice as much as the comparable $ 10.00.
Just 1 cent less and we doubled the sales. Consumer hear/see the $9 in a $9.99
price and the $10 only in a $10.00 price. Go figure!...KF

[TowerOfPower]

I read that a site put this 'price psychology' to the test with a $99, $97, $95 price tag. The original tag was $95.

The $99 price tag outsold the original $95 tag but a factor of 2.

The $97 price tag outsold the original $95 tag buy a factor of 5.

I haven’t looked into this too deep, but this might only work with a certain type of product and target audience. Probably mostly the ebook 'work from home', 'get ritch online', 'seo' types.

I also read that $9.99 vs $10.00 mostly works in America and not in the rest of the world. I think it was compared to Germany in the article.

[edited by: TowerOfPower at 9:30 pm (utc) on July 27, 2008]

[jwolthuis]

Is there any truth to the saying that consumers prefer an odd-numbered price? For example, $9.95 versus $9.96? If so, any ideas why?

[TowerOfPower]

To myself the odd number is more focused and solid. The even number I have to think about when I see it. It's almost like I pause on it, but not in a good way.

$9.95 verse $9.96

Take a look at the above, and then take a look at it again, see how you're kind of comfortable with the 9.95... You look at it very quickly, but when you move on to the 9.96 you pause on it.

Maybe I've been psychologically conditioned to accept the odd number since this is what I see most often. Other cultures will respond differently.

[edited by: TowerOfPower at 9:30 pm (utc) on July 28, 2008]

[lorax]

>> you're kind of comfortable

I don't think it's that I'm comfortable with it. I think it has more to do with that I'm NOT comfortable with it but it's so insignificant that I don't want to waste brain power on it.

[TowerOfPower]

>>I think it has more to do with that I'm NOT comfortable with it but it's so insignificant that I don't want to waste brain power on it.

I think you might just be on to something here.

[edited by: TowerOfPower at 1:13 am (utc) on July 29, 2008]