It does work believe it or not. It is something that plays to your subconscious. You will favor the slightly cheaper option even if you aren’t aware of it.
I learned all about this in “thinking fast and slow” by Daniel Kahneman. He talks about system 1 and system 2, where system 1 is your kind of knee-jerk reaction to a thing (thinking fast), and system 2 is the contemplative and careful consideration of a thing (thinking slow).
I would argue that some people overly leverage system 1 (thinking fast) because it’s generally easier, and takes less time and mental effort to do. Those that either can’t, or are unwilling to engage system 2 in their day to day activities, will 100% fall for these kinds of misleading prices, since system 1 is cutting so many corners so that it can be fast and efficient (mostly on how much energy is used), that it skips a lot of the cognitive steps and goes right to the (often incorrect) conclusion. That $19.99 is $19 (or $10 in some cases).
In the book, they discuss that system 1 often gives the wrong information that is later rejected my system 2 when further consideration is given to a particular input/stimulus.
If someone isn’t engaging system 2 as a check to ensure system 1 isn’t lying to them, then shit like $19.99 seems cheaper than $20. It doesn’t hold up to any scrutiny, but they’re not targeting thoughtful people with these practices. For thoughtful people, there’s functionally no difference between $19.99 and $20.
Yes, the difference is one cent, but given that one cent is so worthless in today’s society, to the point that Canada stopped making one cent coins (and other countries have done so as well), there’s functionally no difference between the prices.
One cent is only worth anything if it is combined with many other cents. The sum of those pennies becomes valuable when you conglomerate enough of them.
That’s a great way to put it
not just cheaper though
even subconsciously $15.55 will not be that better than $15.56
but in a change from $20 to $19.99 the whole first number is smaller, and that gives our ape brains the feeling that it’s not as expensive
to reveal the vibes your brain operates on, think about bigger numbers. Imagine yourself to be in kind of a rush, you want to buy something, but family is waiting, or you need to walk your dog, or maybe you’re doing shopping before work, regular life stuff,
first scenario
an identical item is sold for $2920 in the first store you visit, and for $2970 in the second store you visit. The stores are an inconvenient travel time away from each other. Do you go back to the first store?
second scenario
now, an identical item is sold for $2975 in the first store you visit, and for $3025 in the second store you visit. The stores are still an inconvenient travel time away from each other. Do you go back to the first store?
though the difference is still $50, the jump from $2975 to $3025 feels more significant than $2920 to $2970. And obviously many of us will go back to get the cheaper option in both cases, but there’s a lot of people on this planet who have money to spare but not the time, and a lot of other circumstances too, marketing people know it and will do their damnest to sway you to buy their product
Horrible idea: plugin that rounds all numbers up
Recursively
Perfectly great idea!
But it IS how we see prices. If there weren’t science behind it, they wouldn’t be doing it.
A lot of marketing strategies are pseudoscience. Just like a lot police investigation practices or body language assumptions.
I was watching a PBS documentary about the first humans in the Americas. All the scientists are super cool until you get to the American anthropologist who starts using phrenology to explain why Native American tribes shouldn’t be given repatriation rights, only for a Danish geneticist to say “yeah, this is absolutely a Native American and i am willing to testify to that in any court of law”
Pseudoscience is still all the rage if it can be used to push a political agenda.
Some marketing strategies are pseudoscience, but this one isn’t.
Does anyone in the thread have actual info to back this up?
You should be able to find various tests and studies of this phenomenon on Google
So, it’s a “no” than?
It’s a yes but find it yourself
This doesn’t meet the bar you want, but my marketing professor called the .99 idea the single greatest thing to come out of marketing in a century.
Sounds about right.
Marketing hasn’t done anything positive for humanity. It is all just to manipulate people into buying shit they don’t need. It is the main driver for the overconsumption.
JC Penny kinda showed that no. It isn’t pseudocience
What’s the story about JC Penny?
The CEO decided that clients were smart intelligent people and treated people as adults. Aka, no discounts, no 99 pricing, it just costs what it costs, as low as we can make it, plus our margin.
JC Penny was already not too well, this helped sink them
Poor guy. Tried to do some good in the world and paid the price for it. Nobody ever went broke overestimating the stupidity of the average person.
“Why would I pay $25 for these pair of pants at full price when I could pay $24.99 for those [identical] pants that are half off?! Clearly, that’s the better deal!”
Hell, could probably even make it $29.99 for the identical pants and people will still go with that because they think they’re paying five more bucks and getting a $60 pair of pants
It was less about the .99 pricing and more about “Sale” pricing and ‘coupons’. Retailers will put a pair of pants on “Sale” for 50% off 51 weeks out of the year and people think they’re getting a great deal whereas when it’s not half off, they just don’t buy.
dowsing for suckadrippas
But it IS how we see prices.
I don’t. Never did. I’m sure I’m not the only one.
You do though
At some level you will favor the 19.99. You might justify it with some other rational but there will be the bias.
No, I really don’t.
No, I dont though.
It really depends on the study you choose to believe into. (No, everyone does it, isn’t a pro argument. People always had strange beliefs which later changed. I think it’s called major consensus narrative or maybe consensus reality
I like this hill, I’ll stay here. Thank you.)
Same, I’ve always just rounded up. Even when it comes to things like .50¢ I still just round it up to the next dollar.
The science is about how you initially react to the number. Your brain will see $19, and immediately you’ll think it’s $19. Only upon further inspection and processing through your cognition, you recognise that its $19.99, which is basically $20.
It’s that initial reaction they want, to grab your attention. Anyone who is going through life without leveraging their higher thinking will fall for this shit. Anyone who thinks, at all, won’t.
Unfortunately, there’s a nontrivial number of people who fall into that first category. People who were never taught to think. They just do.
From my experience working in retail I’ve seen people say out loud something like “oh, it’s only 4 dollars!” When the sticker says $4.99. This shit apparently works on a lot of people for some reason.
I think I’ve heard a couple people do this. One directly in response to me saying it was $5 lol.
This is my neighbor all the time.
Like dude, round up!
I do that with gas, but everybody knows the .9 cents are implied.
It’s the three strategies of pricing:
- Price the item as XX.99 to make it feel cheaper than it is
- Price the item as a whole/round number to make it feel premium
- Price the item as a seemingly random number like XX.57 to get ahead of the shopper who are weary of the first two tactics
Honestly I just want tax included on the price tag.
That is honestly insane.
In NZ the sticker price is what you pay, if the price on the sticker doesn’t include tax, it is false advertising and you pay what is on the sticker.
It is entirely up to the retailer to ensure that the price is correct. The only exception to this, is if the price is obviously wrong e.g. $5.00 rather than $500.
It really is considering how easy it would be to implement.
That’s an American problem too
The amount of times I’ve watched Youtubers say something like “35 dollars” while showing an image that shows the price as $35.96 happens too often for me to side with OP lol, sorry.
Wasn’t that originally to sell newspaper?
I thought it was a trick by sign writers who charge by the letter.
It was originally to force the cashier to open the till.
Say an item was $20. If the customer paid with a $20 note, then the cashier could, intheory, pocket it, without it showing up on the rocords. If it was $19.99 they needed to open the till to get a cent out. This meant it was recorded, and so the till wouldn’t balance.
correct answer (as far as my opinion is concerned without doing any actual research)
To be fair, my research is decades old at this point.
But you get a penny back, isn’t that great?
Jokes on you. We have sales tax.
It’s so annoying that stuff always comes out to like .04¢ over the dollar, so now I have to carry 96 cents around all day.
I’m so glad coinstar bribed like 4 senators 30 years ago so we still have these gross metal circles everywhere.
I still don’t get why you guys have that and not the business.
Sellers are responsible for it. They just don’t include it in the advertised pricing, they could if they wanted to.
It’s basically for the same reason stores charge $19.99 instead of $20.
This is locally grown artisanal bullshit, it’s actually $300, please tip.
please tip
I’ve actually started carrying cash again for the first time in 20 years because I’m sick of every fucking POS machine in the world asking for tips. Yes, I can choose not to tip, but there’s an emotional cost associated with that decision. There’s a cost associated with just seeing the option instead of being able to simply pay for my item and go about my day.
Its literally how we see prices which is why companies do this
$20 and $10 shipping: 😡
$30 and free shipping: 😄
It is kind of a dick move when companies overcharge for shipping. I only charge calculated shipping on large or heavy items because those are the ones that vary a lot and I don’t want someone in zone 8 (like Southern California or even someone in HI buying it and shipping costing more than they paid. If it’s under 1 lb then I just give free shipping and bake it into the price.
This reminds me of my early shopping days using EBay, where it wasn’t uncommon for sellers to under-price their products so they show up near the top of the price (cheapest-most expensive) sort pile, and then charge an outrageous amount in shipping.
I’ve found that almost always (at the time), that the seller offering free or low cost shipping was usually cheaper.
That was because their fees were based on the sale price of the item minus the shipping. So they were only paying fees on 1 cent. They changed the fees so that the total sale including shipping is calculated.
I don’t understand people who won’t pay £5 for shipping, but will instead spend another £15 on something they don’t need so they get free shipping.
All you’ve done is lost money.
It depends. If it’s something I know I’ll use, especially a consumable, I’ll do it.
I’ll admit, this works on me sometimes.
I hate that it does, but it do.
That at least allows you to retrieve the full amount if you return the goods. Shipping costs you don’t get back.
Part of it is that there’s less hidden costs. I like it when it’s just “the total is $30” instead of “there’s $8 shipping and a $2 service fee and then $4 in taxes and…”
I’ve also seen some online stores lure in a customer with a really cheap initial price and then on the last page just slam them with insane shipping and handling fees hoping that the customer either doesn’t notice or feels too invested at this point to cancel their purchase.
But yes, part of it is also people are stupid when they see the word “free” as if the store wouldn’t move the cost somewhere else.
These dumbasses thinks this works on us smart people. Anyway, gotta go fight some people on black friday for shit i don’t even need nor afford
Which just so happens to have been the same price all month.
Regular price: $399.99
BLACK FRIDAY SPECIAL:
$799.99$399.99It was also on sale yesterday for the same price.
The only thing that I ever go for on black Friday is software. A lot of software is actually legitimately cheaper on black Friday sales.
Isn’t it just as cheap when you just download it on black friday?
It is how it is, Americans are the dumbest
Honestly, however much I want to pretend to be better than that, I think it does work on me. Obviously not on a conscious level, I know how numbers work, but some part of my monkey brain sees the 1 instead of the 2 and therefore concludes that it must be way cheaper. It’s a feeling that no amount of facts is going to disable. And in the end many purchasing decisions aren’t based on a full analysis but on feelings.
People suck at math and this is how they confuse people into not caring what the actual price becomes when they have to add multiple items together.
What’s 19.99 + 21.75 + 4.99 + 3.99 + 1.99? Can the common person do that math in their head while grocery shopping? What about adding the tax to that total? Not a chance.
Most people probably don’t even know what the sales tax is in their own state.
your price tags show the price before tax? that’s fucked up
The major reason given is that taxes vary so much in the US by location that it would be onerous for businesses with locations in different areas to print different price tags and advertise prices broadly.
It’s even an issue online because, until you enter your address, the online retailer has no clue what your tax rate will be, and they have to assess tax based on the purchaser’s location. Postal code isn’t always enough, as they can be shared by different cities with different tax rates.
Some areas also vary tax by date (tax free holidays), though I don’t think consumers would care if their total ended up being cheaper than they thought.
A national standard VAT would be the only way businesses might start including tax in price, but there’s no way to do that without a constitutional amendment. States have the power to tax, and they’re not going to stop now even if they receive VAT revenues.
It’s bullshit because every location prints their own price tags lol.
And then calculates tax right at the register. They have everything they need to do it, it’d hurt their bottom line and be consumer friendly so they don’t.
In some countries like India they have GST (Goods & service tax) which is applicable all over India. It was implemented in 2017 and has unified the indirect tax system across the country. This means that the same tax is levied on goods and services irrespective of the state or territory in India. Most items have 18% GST and the price tag always shows tax included, which is convenient for buyers.
Most people dont just round up after seeing the price?
No, most people just give up after seeing the price.
All the people i saw either rounded up or rounded down by mistake and then rounding up
Most people round down. Their brain locks on to the 1 of 19.99, and approximates it to 10.00. We need to actively counter this to see it as 20.00. It’s a skill most people don’t apply all the time, and a number can’t even do.
Once you can do it reliably, it’s mind-boggling that others can’t, but it’s still a learnt skill, that needs to be applied.
Most people round down
Source?
Some slight ramdom paper reading, back in my uni days. Though I’ve ran across it via other sources over the years since. Unfortunately I don’t have any links to hand though.
It might better be described as people put numbers into categories. Most people have a 10-20 category. 19.99 fits. 20.00 gets bumped up to the next box. It’s a sub/semi conscious thing. If we use our higher thought process, we can deal with the numbers. That takes effort however, by default, we chunk. The price just abuses a common rollover point most people share.
So, no source do the actual research backing your claims?
Where is your thesis with references?
You do realise that it is a claim which needs to be proven, not the other way around, right?
Most of the people i saw round down notice that and then round up
It’s a subconscious thing. It’s how our brain is wired. It’s a bit like advertising. Most people don’t like ads. However, when confronted my 2 similar products, we will go with the familiar one. The source of that familiarity is irrelevant, ads make it familiar, just the same as using it, or a recommendation.
It’s possible to override both of these effects, but that requires a level of conscious effort. I can almost guarantee you’ve been caught by both at different times. You just didn’t notice (since noticing would allow you to correct).
Basically, $19.99 is in the category “under $20”. $20.00 is in “over $20”. Without conscious correction, you act on this.
Weirdly, my brain went through those numbers as “20, 22, 5, 3, 2.”
How is that “weird”? That’s just good numeracy.
I got through a bunch of them fine, then the $3.99 tripped me up.
Ha! That’s what they want.
Now add the sales tax. And don’t forget about bag fees and to tip Tippy.
We don’t have any of those things here.
So they did get you at 3.99 -> 3!
Maybe because your brain wanted 5+3+2=10 instead of 5+4+2=11 ?
