“…the average person treats a price ending in .99 as if it were 15 to 20 cents lower.”
The tendency is called left-digit bias, when the leftmost digit of a number disproportionately influences decision-making. In this case, even though the real difference is only a penny, research shows that, to the average person, $4.99 seems 15 to 20 cents cheaper than $5.00 – which results in selling 3 to 5 percent more units than at a price of $5.00"
Why Literally (Almost) Every Price Ends in 99 Cents
https://en.wikipedia.org/wiki/Psychological_pricing
EDIT: The left-digit bias is not just pennies / cents. It applies when going from $99 to $100…$399 to $400…$999 to $1000 etc.
EDIT 2: If you have a car for sale and you want $10,000 for it are you listing it for $10,000 or $9995?
My favorite is gas is (for example) 2.99 and 9/10ths. Talk about desperately reaching for that left-digit bias.
Whenever I visit the US and see the gas stations with the 9/10 cent sticker pasted on the signs it makes me laugh internally.
Here in the UK our petrol prices end in .9 pence 🙃
So… 2.999?
Ending prices with 99 is manipulative. We accept it from businesses because we’re conditioned to, they’re businesses after all! Being manipulated by businesses is just how our current society operates, part of the environment we live in. But if an individual offers us something for a price ending in 99, we’re much more likely to be suspicious of it.
The article actually explicitly mentions this, and suggests you list things for 25 under instead of 1 under, for example, as it won’t immediately trigger recognition that you’re doing this.
All the better to psychologically manipulate our fellow people in pursuit of profit, my dear.
Yeah, if I want to sell something for $400 then I list it at $395 rather than $399.
But then you wouldn’t sell it for 400.
And then I swoop in and list the same thing for $394
Hell of a deal! I’d pay an extra $6 for a deal like that!
$394.99
My brain rounds UP everything to the nearest integer. Pi is 4, joke’s on you.
That sounds a lot like when people say, “I’m not affected by advertising at all”. I am sure the effect has influenced some of the purchases in your life.
And even if you are 100% immune to it my point is about selling items to other people. You’re trying to get other people to buy the item you have for sale. Your brain rounding up does not allow you to take advantage of the well-known left digit bias which affects everyone in the world except you. So, if you round up when you sell an item you lose some advantage.
I’m not shitting on your post, it was very interesting! If / whenever I need to sell a product, I’ll think about it.
Fair enough. Upvoted!
If the scale you are calculating on is big enough pi is 10
Found the
engineerastrophysicist
EDIT 2: If you have a car for sale and you want $10,000 for it are you listing it for $10,000 or $9995?
which results in selling 3 to 5 percent more units than at a price of $5.00"
Well 5% more units when I have 1 unit to sell is still 1 unit. I’m not getting more money by doing this asshole psych 101 trick. Sooo I’ll stick with being a decent person.
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Thats just the whole second hand market strategy. First bid is always close to 70% of the asking price, so you make sure that 70% is actually what you want for it.
Which is exactly validating what I wrote in my post title…people watch merchants use the left-digit bias and then go ahead and use whole numbers when they sell their own items. That’s what the post is all about!
No, this is proving the use case different: Your logic would put the car at 9995, to present it as cheap. The actual advice is to put it at 12000, higher, to present it as expensive, and then “allow” the buyer to haggle you down.
The actual advice is to put it at 12000
No, the actual advice is to not use whole/round numbers. So, 11,999 or 11,995 is better than 12,000 due to left-digit bias.
Not if the intention is to make it look expensive. Bugatti’s don’t sell fot 499999.
Plenty of people are trying to deny that this effect exists or that it works. You can create a bunch of hypothetical one off straw man arguments where left-digit bias may or may not be the best solution or be irrelevant to the chain of events that make the sale happen. However, the act of pricing things at 99, 98, 95 etc. has been around for 140 years and has been studied by psychologists, marketers, and corporations.
All of the resistance to pricing things using left-digit bias present in this thread validates my post title. Merchants have been pricing that way for 140 years and yet when people sell their own items they don’t - and as this thread shows they don’t for a variety of reasons but none of those reasons makes the effect not real.
Why the hell is the post so controversial? Merchants do this, individual people do not. That’s it.
The problem isn’t the effect, the problem is you don’t seem to understand what it actually does. The idea is to reduce the price in such a way that a small discount appears larger, increase sales, and make the reduction back in volume. It works, and makes sense, and is done, if and only if you compete on price and trade in volume.
Your title is, at the time of writing: “People live their whole lives watching corporations end prices with 99 yet when they list their own items for sale they choose a whole round number and never question it.” This thread is full of people giving you reasons why they don’t or wouldn’t do that, meaning they clearly do question it, and are deciding against it.
Still 3-5% more possible buyers for your car by the logic I guess. Not that I agree with the system but marketing is fucked.
I don’t really understand the “decent person” comment.
Left-digit bias is a default way that the human brain works.
Humans also tend to like fat, sugar, and salt. So, when you go to a restaurant if they add more butter to a recipe than you would at home are they unethical?
It’s not decent to use psychological manipulation on others in order to benefit yourself. As they said, why go r through this just to earn an extra $5 when selling a single vehicle?
You mean 5$ less
Yeah…we all understand the trick and hate it.
It’s a dark pattern. Maybe at one point in time people would be tricked into believing $3.99 was emotionally a lot less than $4 but we’ve grown up with it now for several generations. Everyone knows it costs more anyway because of taxes not being applied until the register. The mistrust is built into the system out of tradition more than anything.
Everyone knows it costs more anyway because of taxes not being applied until the register.
Well, that’s only if you’re in the US.
This trips you up so many times if you visit the US from somewhere else. The number of times I’d see a snack listed for 99c, have a dollar bill on me and then they ask for like $1.12 is higher than I’d like to admit.
If at any point left-digit bias stopped working then merchants would increase the price by a penny or a dollar (when going $99 to $100). Walmart is not going to leave money on the table. It still works.
It still works at scale. If I’m selling a couch on craigslist for $10, I’d have to be a massive butthole to advertise it at $9.99. The fuck am I going to do, give them a penny in change? $10 is $10. I only need to sell it once, and I do not have the patience to deal with someone looking to haggle.
I understand. But what if you’re selling a refrigerator or laptop for $400? You could list it for $399 or $395. The left-digit bias is not just pennies / cents. It applies when going from $99 to $100…$399 to $400…$999 to $1000 etc.
Then I want $400. Like I said, I onlyhave to sell it once. I don’t need to sell it to more than one person.
And if I saw someone selling a refrigerator for $399, personally it would make me doubt their trustworthiness.
The left digit bias is real over large groups of people. You’re going to sell more laptops at $399 because of left digit bias, but it doesn’t make a discernable difference when you’re only selling one. And again, then I have to deal with making change. Somebody’s going to hand me four hundred dollar bills, and I’m going to dig into my pocket for a crumpled single? Or maybe three quarters, two dimes, and a nickel?
I do not have the patience to deal with someone looking to haggle.
Not trying to start a debate with you and I know you’re just talking about a $10 item (and I agree with you on that) but your comment about “not looking to haggle” being the reason you’d use a whole number is not in agreement with another psychological trick.
When Negotiating A Price, Never Bid With A Round Number
So, round numbers actually invite people to haggle more than precise numbers.
That’s not a persuasive argument. I’m not interested in haggling. The price is $10. If you see that and think “Oh, I’ll offer $5” then the answer is “no”. We’re sure as shit not going to meet in the middle at $7.50.
Same argument at $400. That’s what I want to get for it, which is why I put that price on it. I don’t want $399 or $250, because life is too short and I’m not that desperate to sell anything. I’d rather give it away for free than haggle with someone over the price. I don’t need to sell it today, and I’m happy to wait for someone who is willing to pay the asking price. I’m not running a pawn shop.
Not trying to debate you at all. You are free to believe what you want to believe.
The title of my post is that people see those 99 prices and then continue to sell their items using whole numbers without questioning it. So, in your responses you validated my post title.
Right, and my point is that we don’t question it because it would be absurd to sell one-off items on-digit-removed from the actual selling price. I wouldn’t buy anything from someone selling shit on craigslist for $99 because it’s the sort of dishonest advertising that takes advantage of a psychological bias. I understand why Walmart does it, but that doesn’t make it a smart thing that good people do. It’s ths sort of deceptive thing greedy people do.
The marketplace probably matters regarding 99 pricing. On Craigslist it looks different than Amazon marketplace or eBay. I sold books on Amazon and all the big sellers used 99 but then when some college kid (with little or no feedback) listed a used textbook they would use a whole number. So, trustworthiness based on 99 doesn’t work that way on Amazon or eBay. The whole number listers are the ones with little sales history and no feedback for you to judge.
I personally use a nickel less than the dollar or $5 less than $100. If I want to sell something for $400 I will list it at $395.
I always round up.
I don’t get this idea that 99 makes your brain feel like the price is lower, I don’t know that I’ve experienced it. 99¢ is $1. $49.99 is $50. Plus tax. Who are these “average” people that give themselves a magical mental discount?
Sadly I’m one of them
I love that the article that you didn’t read begins with:
Think you’re too savvy to be influenced by prices that end in .99, like $4.99? Think again. A 2018 UC Berkeley study found that the average person treats a price ending in .99 as if it were 15 to 20 cents lower.
Because I have no interest in carrying around coins to make change
Devils advocate but I absolutely list my online prices at $XX.99 because people are more willing to buy from a seller who seems like a legit business instead of a private person. This is also why I make kinda arbitrary prices like $113.99 instead of something like $115 even.
With a name like
PP_BOY_how could you be anything but legit? /s lolI agree with that strategy. Makes sense.
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One of the reasons this originally gained popularity hasnt been mentioned.
Retailers used it as a tool to force employees using cash registers to open the register to give customers their small denomination change. If prices were a flat number its a lot easier for a shop assistant with sticky fingers to just pocket the money if the customer had the exact price.
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https://en.m.wikipedia.org/wiki/Cash_register
I mean it is wikipedia, but still… its under the “History” section.
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one fella supposedly makes this claim (Bill Bryson)
It’s not just one fella. You have to follow the links. Immediately after Bill Bryson’s name is a link to odd pricing. If you click that it takes you to the Psychological Pricing page. Scroll down to the Historical Comments section and in that paragraph at the end it has a [22] citation. Then you scroll to the bottom of the page to see the source and you see that it was a from book published in 2012.
So, now you have two people claiming it, Bill Bryson and Steven Landsburg.
I’ve found a ton of things he’s claimed in books to have really questionable sources (i.e. he makes claims and positions as truth but doesn’t mention that those things are guesses at best)
Here is the source listed on Wikipedia:
Wouldn’t the cashier get more opportunities to swipe money every time they open the drawer? And how would they explain the drawer not adding up at the end of the shift?
If the price was exactly $10 and the customer had exactly $10, the cashier didnt have to open the drawer at all. There is no record of any sale, the drawer doesnt have to add up because the money never went in and the only way to prove that they stole that $10 in their pocket is to catch them in the act.
What, why tf wouldn’t the cashier have to open the drawer? Why wouldn’t they have to record the sale? They’d still have to account for the loss of inventory. Even if they did the 99 cent thing all a cashier would have to do is keep a pocket full of pennies to be able to do the exact same thing. None of that makes sense as an explanation.
Well, it makes sense and seems plausible to me. With the speculated origin being the late 1800s when there were no cameras and no software system used for tracking inventory.
The lack of a computer system is all the more reason why it would need to be rung in the cash register and typed or written up. With no co.puter, everything has to be done by hand and there’s no way anyone would be able to recall every transaction in a given day by memory.
If it was say fruit, or beer in a bar, one isn’t counted that close bulk and the other, you could just wait till you sell six and then ring it through as a six pack to go.
The origin is speculated to be the late 1800s. Counting the drawer and drawers adding up is easy now because we use computers. Imagine a General Store in 1885 and you can see how this is plausible.
How is this a shower thought?
Seems like the type of thing I’d randomly think of in the shower
(Also, where else would it go?)
How is this a shower thought?
“I wonder why most prices end in 99. If I were a retailer I would use whole numbers to make things easier”
Is that better? Is it dumbed down enough? The alternative is to not post and contribute to the community.
If corporations were in actual competition like individuals are, then I’d pass by the one that is nickel and diming me with BS. We only tolerate it because of poor competition.
My head went straight to yard sale prices and thought watching someone pull out 99 cents sounds annoying… in the end the psychology makes sense but a flat number cash or card seems more convenient to the average Joe I’m selling to.
It’s not just pennies / cents. It applies when going from $99 to $100…$399 to $400…$999 to $1000 etc.
If you’re selling a car and you want $4000 for it then it’s best to list it for $3999 or $3995. Sure, you’re giving up $1 or $5 but you’re making that price look much more attractive due to the left-digit bias.
Since I’m not desperate for money, I won’t do it as a matter of principle. What that principle is exactly, I don’t know…
Honesty? It only works if you succeed in tricking people.
