£9.99 vs £10 - How real is the perceived difference?

[TLMartin]

Hi

There was always the myth when I was growing up that shops would charge £9.99 instead of £10 for an item because customers really saw it as significantly cheaper. I was never sure about this as I would always see it was only a penny.

Later on in life I discovered it was a myth as I discovered that the true story was actually from many many many years ago about making sure staff had to give change (as most people would pay with a rounded number) and thus have to record the transaction and not pocket the money

However today I still see items at 99p 9.99 19.99 etc rather than a whole number..... does this really make that much difference? I've tended to price my items in round numbers (still often cheaper than competitors) but instead of a competitor price of £19.99 I'd price £19..... would I actually be better doing £18.99 as that 1p difference is seen as so much more?

What are peoples thoughts on this?

 

[ldjames]

I notice that a lot of small children think that £1.99 is £1. Their parents give them a £2 coin, they come back with 1p change and a telling off ensues.

Apart from small children, I think 99p is £1 with some added nuisance, for both parties.

 

[TLMartin]

That's what I thought... I rounded prices purely as it seemed to be easier

Over Xmas while I was just starting a bit of sales (before I set up my online shop etc) I was using Facebook..... I managed to get several Pie Face games in. I knew I could sell on ebay for £30+ I knew I could sell on Facebook for £30. I refused as it was xmas and for kids. I was willing to sell at £20

I made the comment it was RRP £19.99, etc.... and I was selling at £20 not the £30 everywhere else was (shops had no stock)

I had 1 person moan about the fact I was selling something RRP £19.99 for £20 ..... Clearly there was common sense behind the £20 it was still a bargin compared to others... I just didn;t want to look behind the sofa for a number of 1p's for change lol

 

[AllUpHere]

It's an interesting subject that's been researched to death. There is plenty of fairly in-depth data available on the subject. There are a couple of books that cover the basics well. I can't recall the titles at the moment, but i'm sure I could find them if you have trouble finding info.

 

[beasty]

19.87 is better than 19.99
people are too usedd to 19.99 and think jees just call it 20 quid
19.87 does indeed seem cheaper (Yes it is 12p less but you follow me) its not clocked as 20 quid
when you used these digits 6,7,8 people are more inclined to negotiate towards the next big number so 19.50
if you are at 19.99 you negotiate to 19

I like this stuff WAY too much, recently was talking about it for a good hour with a guy who has a golf app.

Car being sold at 5k, you might ask for 1k off
Car being sold at 4867, you are more likely to ask to round it down to 4500
The lower advertised price gets a higher average sale price.

 

[Scott-Copywriter]

Hi

There was always the myth when I was growing up that shops would charge £9.99 instead of £10 for an item because customers really saw it as significantly cheaper. I was never sure about this as I would always see it was only a penny.

Later on in life I discovered it was a myth as I discovered that the true story was actually from many many many years ago about making sure staff had to give change (as most people would pay with a rounded number) and thus have to record the transaction and not pocket the money

However today I still see items at 99p 9.99 19.99 etc rather than a whole number..... does this really make that much difference? I've tended to price my items in round numbers (still often cheaper than competitors) but instead of a competitor price of £19.99 I'd price £19..... would I actually be better doing £18.99 as that 1p difference is seen as so much more?

What are peoples thoughts on this?

It's not a myth. Pricing psychology is a well-known and widely-studied element of marketing, and it can make a difference. I've seen it myself via split-testing.

In answer to your question, yes, you would probably be better off reducing the price to that figure, or ideally something like £18.95. As Beasty has mentioned, there are various factors involved in pricing psychology. Certain numbers are better if there's potential for negotiation, whilst in normal fixed-price e-commerce, lower single digits appear to be cheaper (so a 5 on the end is better than a 9).

 

[Capple]

Just found this on an old BBC article which talks about emotional differences

One theory is consumers just aren't up to the maths. Dr Jane Price, lecturer in psychology at the University of Glamorgan, says we "tend to put numbers in categories like 'under £5' or 'under £6' - rather than them representing a value. Shoppers are aware of what is going on, but don't respond to it because they don't think logically about how close numbers are - such as £99.99 and £100."

She thinks shoppers tend to focus on the big denomination - which the pound sign draws the eye to - rather than the smaller denomination: the pence. There is also the emotional incentive - people like to feel they are getting better value for money.

 

[TLMartin]

Thanks so much... when I said Myth... I meant the myth of where the 1p under rule came from.... However it very much appears to be a self-fulfilling prophecy.

Thanks so much for all your feedback, I guess I better get altering my prices and labels lol

Thanks

Tristan

<<Mod's Edit: Self promo image links removed>>

 

[columbo]

one way interesting study has shown that for small amounts rounded prices performed better..

so the £5 mini-flashlight will sell better than the £4.99 one...because it just seems like
an easy quick transaction..