• Share on Google+

Life’s little luxuries may sell better if they’re priced with a rounded number – e.g. $20.00, rather than $19.99.  That’s the finding of a new set of five studies in the Journal of Consumer Research that looked at the impact of rounded and non-rounded pricing on product appeal.

So whilst the ‘left-hand digit’ effect (we’re too lazy to read the whole price, so $99.99 is experienced as significantly less than $100.00) may work for rational work- or task-related purchases, if your customers are buying for pleasure, you’ll probably shift more stock with ‘double 0’ style pricing.

Interpreting the results the researchers suggest that non-rounded prices can encourage reliance on rational, practical thinking because they are more complex to mentally process. The practical upshot is that a .99 suffix ‘feels’ right for a product bought on reason rather than emotion.  The opposite is true of products purchased for pleasure on emotional feel.  Emotional purchases feel right with rounded prices.

Conducted in the lab rather than in the field, the findings need to be tested, but a quick real-world test would be easy for online retailers for whom cashier theft would not be a worry. Historically, a key rationale for .99 style non-rounded pricing had little to do with pricing psychology, and much to do with forcing cashiers to ring up a record of the sale because they would need to hand back change.

Wadhwa, M., & Zhang, K. (2014). This number just feels right: The impact of roundedness of price numbers on product evaluations. Journal of Consumer Research. DOI: http://www.jstor.org/stable/10.1086/678484