Is Ending Prices with “.99” Backfiring on Sellers?

You know how sellers end prices with “.99” to trick you into thinking something is cheaper than it is?  The hope is that, psychologically, your first impression is that something is a good deal after seeing the first number.

But it turns out, the 99-cent pricing trick could backfire on sellers, if the seller is trying to entice you to upgrade.  Researchers at Ohio State University found that it’s very difficult to get buyers to “cross the boundary” of the round number.

For example, they set up a coffee stand, and sold a small coffee at a price of 95 cents, with the option to upgrade to a larger size for $1.20.  Then, they changed the small coffee to a flat $1.00, with the upgrade at $1.25.

Only 29% of the customers upgraded from 95 cents to $1.20, while 56% were willing to go from $1.00 to $1.25.  The second option was always more expensive, but it didn’t ask buyers to cross the $1.00 mark like the first did.

They also said that going from $19.99 to $25 may seem like it’ll cost more than going from $20 to $26, even though it is actually less of a difference.


(OSU News)