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Odd or even pricing, does it make a difference?

$10 or $9.99?

     
9:21 am on Apr 5, 2006 (gmt 0)

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I currently use whole number pricing on my web site.

There is a lot of theory on the web regarding this issue. I've read things like, "use the number 7 when listing prices," like $297 instead of $300, and use fractions, like $19.95 as opposed to $20. Are consumers mentally conditioned to respond better to odd pricing?

Questions:

1. Does it really makes a difference on conversion rates if you list a price as $10 or $9.99?

2. Does anyone have any practical/real world evidence that this kind of practice works?

9:47 am on Apr 5, 2006 (gmt 0)

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1. yes
2. yes

9.99 is better than 10

but it is easy enough to test this run the 2 different prices at different times (or randomly at the same time if you can build it into your system) and see what happens

9:49 am on Apr 5, 2006 (gmt 0)

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Are consumers mentally conditioned to respond better to odd pricing?

In theory yes. Most marketing litterature about pricing suggest this odd pricing method. You also see it frequently in places like Wallmart and on Ebay.

Ive experimented a lot with pricing and can conclude that it works, at least in my field of business. I could imagine that it varies depending on the product you want to sell. If you are uncertain try it on a few items and see what happens.

9:57 am on Apr 5, 2006 (gmt 0)

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It's not an odd thing... more if people see 9.99 they round down to 9 - thats a whole dollar/pound less than 10.
11:44 am on Apr 5, 2006 (gmt 0)

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I also think it's way more important when you are talking hundreds as if its $299 - they think 200 rather than 300
11:56 am on Apr 5, 2006 (gmt 0)

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yes

It makes a big diffn. This is my practical experience.

Go for it ..

12:42 pm on Apr 5, 2006 (gmt 0)

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It's partially cultural. In Europe you don't see the 9.99 anywhere near as much; it now looks somewhat "crassly American" when I do see it.

Also, in most places taxes tend to be already hidden in the price, so 10 euro is 10 euro.

12:43 pm on Apr 5, 2006 (gmt 0)

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Yes, it does make a difference when you just reduce it from an absolute figure. just give it a try and am sure you'll see a change in conversions
12:56 pm on Apr 5, 2006 (gmt 0)

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walk into a walmart, target, staples, sears etc.

they have forgotten more about price strategy than any of us will ever know....

1:02 pm on Apr 5, 2006 (gmt 0)

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I heard (myth?) that the idea behind 9.99 was so that people could not just steal the whole 10 as they would need to ring the 9.99 through the till to give the customer the 1pence change.
1:03 pm on Apr 5, 2006 (gmt 0)

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depends what you are selling and who you are selling to but typically low prices work well using the 2 decimal positions ie for $3.00 you might want to use:

$2.79
$2.95
$2.99

Your profit margins might be less but if your competitor is selling the same product at $3.00 you will have a better chance to out sell them in volume.

For larger amounts the decimal place losses its eye catching apeal and can make a number apear to be larger!

To most $995 appears to be significantly less than $1000.00

but does $995.99 look more attractive then $1000?

In this case the decimal place does not help and can do more damage than good.

2:20 pm on Apr 5, 2006 (gmt 0)

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When I see a round number price (like $10) I think "this is an arbitrary price - there's no way a value based pricing method would end up at exactly $10. They're making too much money off me."

When I see $9.75 I think - "hmm, interesting that they had to knock off a quarter - there must be a lot of competition. Good deal, I'll buy."

Do I believe it in my logical brain? No. But the urge is really there, and I often go with that gut feeling.

I am one with the masses.

2:20 pm on Apr 5, 2006 (gmt 0)

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I have to agree with Tigrou on that it is very U.S. specific.

I have rarely seen fractional, or non-even numbered prices elsewhere in the world.

In some Asian cultures, odd numbers are considered "harsh" or "edged", but most importantly unlucky.

It very much depends on your target market.

2:22 pm on Apr 5, 2006 (gmt 0)

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Several thought on this:

$9.99 is here for good (in the U.S.) Just too much trouble for B-M retailers to reprice every item in a store even if they wanted too.

Better question is why so many U.S. retailers started using even odder pricing such as $9.74 or $9.88 about 20 years ago.

Two reasons come to mind: 1) allows retailer say they beat their competitors, and 2) allows retailer to better spot fraudulently altered pricing. And I think some use .99 for regular priced stuff and say, .74 for sale items that may have a different return policy.

But I don't know for sure.

2:31 pm on Apr 5, 2006 (gmt 0)

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Better question is why so many U.S. retailers started using even odder pricing such as $9.74 or $9.88 about 20 years ago.

The US tends to place sales tax ontop of the sale price. It might account for odd figures such as these. This pricing stratergy also indicates exact prices and can also indicate prices without discount or special offer. Not a good pricing model for most markets.

2:53 pm on Apr 5, 2006 (gmt 0)

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9.97 sounds even cheaper!
2:53 pm on Apr 5, 2006 (gmt 0)

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I have to agree with Tigrou on that it is very U.S. specific.
I have rarely seen fractional, or non-even numbered prices elsewhere in the world

Most shops do it, here in the UK.

best, a.

2:58 pm on Apr 5, 2006 (gmt 0)

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most downloadable mp3s here in the UK are 79p ...

If you're marketing using price comparison websites then the extra couple of pennies off the price may move you up the list of cheapest deals....

benson712

3:06 pm on Apr 5, 2006 (gmt 0)

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According to Marketing 101 odd prices indicate a low price while even prices indicate quality. Not sure if this is true at all. I just remember seeing it in a textbook awhile back.
3:15 pm on Apr 5, 2006 (gmt 0)

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Many years ago I worked retail and did a few expreiments concerning product pricing. I worked in a store that sold Nintendo games. When they were new they we almost always $49.99. As time went on they were marked down to $44.99, 39.99, 29.99 19.99, etc. Sometimes we would mark out the price and handwrite the new lower price. After several markdowns we would sometimes just make a new sticker with the new price and not show the original higher price.

I found that nearly always people preferred the games that had a manually marked down price. The ones with a new sticker that didn't reflect the original price were not as popular. People liked to think they were getting a $50 game for $20.

There is a lot of psychology that goes on in a customer's mind and if most US retailers think marking an item for x.99 is a good deal then it likely is.

3:52 pm on Apr 5, 2006 (gmt 0)

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If you're marketing using price comparison websites then the extra couple of pennies off the price may move you up the list of cheapest deals....

Hey, great point. Take off a penny and move 5 slots up. Bet not many have thought about that.

Yep,I agree that even numbers may equate to quality. You don't see Rolls Royces advertised at $199.999.99.

Grand dad of all of this is the gasoline industry. Even years ago prices were like 39.9 per gal in the US. That last tenth had to be expensive to add to pumps and signs...but they kept it and you know the major chains must have done LOTS of research. Good enough to convince me!

3:58 pm on Apr 5, 2006 (gmt 0)

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I was just wondering about that. I wouldnt want my products to appear cheap/inferior quality just because I'm using x.99 instead of a whole number.
4:08 pm on Apr 5, 2006 (gmt 0)

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nice post Moosetick but how do I scribble the reduced new price on my site without destoying my monitor!

JureticR

4:26 pm on Apr 5, 2006 (gmt 0)

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I've read that it comes down to taxation and how in the olden days (in the UK at least) tax used to be charged on the pound therefore retailers would lower the price of their products by the smallest increment below a pound - 1 pence. Therefore these companies would make a saving on the tax that they paid.

Personally, I never look at 9.99 and think "ooh, 9 quid. cheap!". I automatically think it's a tenner.

4:36 pm on Apr 5, 2006 (gmt 0)

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I also have an inclination to agree with people that in the UK we now see 4.99 as "Crass and devisive" but that doesn't mean it doesn't work. The climate in the UK is still only shofting though. I see a split between Brits in this thread. For example, when I saw:

walk into a walmart, target, staples, sears etc. they have forgotten more about price strategy than any of us will ever know....
I firstly assume the poster meant they know lots and lots... not that they forgotten it all. Interestingly in the UK, we see ASDA (now part of the Walmart ..."family?"..) selling their clothes for 3 or 5 or 10. Fixed prices. Same with Tesco and Matalan. So - the high street has spoken in the UK and clothes "feel better" when you pay the extra penny.

Ceryainly, though - other Brit posters in this thread are saying that the odd numbers are prevalent still in the UK - and indeed they are.... in the food sectrion of the very same shops!

Go figure. Tesco and Asda did.

4:39 pm on Apr 5, 2006 (gmt 0)

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There was athread here a while ago the gist of which is...

xx.95 sells better than xx.99.

If I recollect right it was generally agrees that it is so.

zoo

4:56 pm on Apr 5, 2006 (gmt 0)

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Does anyone have any practical/real world evidence that this kind of practice works?

Go to your local library and search back issues of the Harvard Business Review for studies showing both that prices ending in nines move more product, and that you can sometimes move more product at a higher price (e.g., selling more when priced at $49 than when priced at $40).

5:16 pm on Apr 5, 2006 (gmt 0)

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You don't see Rolls Royces advertised at $199.999.99

But you do see houses priced like that, here in the UK.

They do drop the pennies, but it's 100% usual to price like 199,999 or 299,995. Anything else would look really unusual.

best, a.

5:37 pm on Apr 5, 2006 (gmt 0)

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I dissagree to most who post here. But then I can only say what effect it has on me.
When I see a price at a glance I tend to ignore the dot (.) thus 999 seems a greater price than 10.
Second this type of pricing makes me feel like the seller is being dishones, is trying to trick me.
5:52 pm on Apr 5, 2006 (gmt 0)

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"how do I scribble the reduced new price on my site without destoying my monitor"

2 methods:

1. Use a sharpie

2. Do like amazon does a lot. Price your product at $14.99 and beside that price have the $24.99 original price crossed out. People will think they are getting a $25 item for only $15. They may even but your product over nearly the same thing that is $12.99 thinking they are getting a $25 item for only 2 more bucks.

Keep in mind that if the item was never priced/worth $25 you are comitting a form of fraud.

I just looked on msn's autos section and see the current Rolls Royce Phantom is priced at $328750. That looks awful close to $330000.

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