Strange. Alternate link:
Why do prices end in .99? - The Straight Dope
When my club was selling to first-year engineering students – generically a smart bunch of kids – we got a steady stream of people who had absolutely misread $4.99 as $4
Intelligence has nothing to do with it. A lot of the initial experiments in behavioral economics were done on MBA students or econ majors. They fell into the trap. Our anchoring experiment was done on a group of engineers with enough seniority to be allowed to go to a conference. They absolutely fell for it also.
I believe that is true and I have no studies either, but it is pretty psychological. In the latter example, even if you overcome the rounding trick, you are still paying $120 extra on an original $300 purchase, which is more than a 33% increase. The deviation from the baseline is the hangup.
I notice that about myself for certain things. I have a mild amount of discomfort when I am at a restaurant and blue cheese dressing is $1 extra, or if a salad doesn’t come with the meal, but can be added for $3.99. If I never believed that the salad came with the meal in the first place, but it was listed for $3.99, I wouldn’t think twice about ordering it if I wanted it. Likewise, I don’t like renting a movie on Amazon Prime for $4.99 because there are thousands of other free movies on there.
These amounts are chump change for me and I waste far more than that on most days for silly purchases, but for some reason I get hung up on how that is just an unnecessary extra extravagance.
Are you sure you’re not me? That describes it perfectly.
Except at special occasion restaurants well above my normal station, the entrée price is almost always something I don’t even look at. But somehow the $2 upcharge for the asparagus vs broccoli? That I’ll notice. It won’t stop me, or even slow me down, but there’ll always be that unbidden pang of emotional regret welling up from somewhere down in the murky depths of the lizard brain. Why? Hellifino.
You don’t know me or if what I say is true so it isn’t what you are looking for…but take it as is.
I worked 30 years as a stat guy in Market Research. As you would guess, I was involved did TONS of pricing studies.
The $8.95 (or $8.99) vs $9.00 is real. There almost always is a noticeable effect on demand when you reach the next whole number equivalent.
Is it huge? no. But it is enough to accept. It has been a while, but I routinely remember demand drops of several percent. It only matters on prices where the product is close to what is perceived as fair value to consumers. If you are below that, or above that then it had virtually no effect (which makes sense when you think about it).
The thought of renting a streaming movie from Amazon Prime practically makes me break out in hives, but twenty years ago I was routinely spending that much every week at Blockbuster. On the other hand, it doesn’t bother me to walk down to the corner and rent a DVD from Redbox. I know it’s a little bizarre to feel this way about such trivial amounts of money, but I do.
Oh, and don’t get me started on all the times I drove across town to get the cheapest gas from a cruddy little hole-in-the-wall gas station. Fortunately that place went out of business a couple of years ago.
I once read that many years ago, maybe 75 or so, a mail order company sent out half their catalogs using even numbered prices, and half were nine-ending prices, which sold, if I recall correctly, 7% more products.
Here you go:
This will also make you feel better:
https://what-if.xkcd.com/22/