

Why charging $12/year converts higher than $9.99 - harscoat
http://www.bothsidesofthetable.com/2011/02/03/want-to-know-why-charging-12-year-converts-higher-than-9-99/

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corin_
Is the reason that $12 converted better than $9.99 _definitely_ because users
are able to visualise it as one dollar a month?

Maybe people see the .99 and are trained to think "99 cents is a marketing
plan to make me think it's cheaper than it is", thus causing it to have the
opposite effect?

Maybe people see $9.99 as a generic price, implying it was picked fairly
randomly, whereas $12 is a slightly odd number to chose, implying that it was
carefully picked as a price that gives users good value? (It would have that
effect on me - $9.99 suggests they haven't worked out how much they need to
charge me to make a profit, and just picked a rounded number that looks
normal.)

I'd like to see $12 compared to $14, compared to $11.99, compared to $24,
compared to $20.

~~~
msuster
Watch the show. He talked about trying $13.99 and other price points. Nothing
converted better than $12.

~~~
buro9
In my case, for donations on a forum... nothing converted better than £3 per
month.

Why? Because it's been translated into "a beer a month", as someone initially
said that surely people derived value such that if they met me once a month
they'd get a beer in for me... and lo, that's exactly what people started
doing online. Prior to this comment I had real trouble pulling in any
donations, now people buy the servers and I a beer each month (via £3
donations).

And in case anyone is wondering, average price of a pint in the UK is £2.80,
and in London where the forum is focused it is £3.30.
<http://www.pintprice.com/region.php?/United%20Kingdom/>

My thought on this a while ago: People have to be able to visualise it in a
human way to them.

They can visualise a pound coin or dollar bill and say, "That's not much", and
they can visualise a pint and think "It's the courteous thing to do". They
can't visualise 67p very well at all.

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linuxhansl
Speaking from personal preference: I always prefer "honest" numbers like $1,
$10, $12, $60, etc, rather than marketing number such as $0.99, $9.99, or even
$55.59 (they seem sleazy and to an extent insulting - as if I cannot work out
that $9.99 is almost identical to $10).

~~~
ams6110
There is a study, though I don't have a reference, that showed that .99 prices
were used most often by discount stores, or their equivalent. They signal
"cheap" to the buyer. Whole-number prices are seen in more upscale shops, they
signal "quality".

~~~
samtp
I've noticed the same thing with cheap/upscale restaurants

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zaidf
In one of my landing pages for a product, I showed a Starbucks cup with its
price. And next to it I showed my service's price--less than the price of
_one_ visit to Starbucks.

I had a similar idea: help people establish a frame of reference. Alas, I got
too busy to actually go live with it.

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cilantro
I wonder if anyone has data on the broader question of whether numbers that
are easily divisible perform better than prime or hard to divide numbers?

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thomaspaine
What's the best way to test out different pricing plans without pissing off
your users? Seems hard to a/b test because if anyone is actually talking about
your company, people are going to be confused that the landing page tells them
$10 when all their friends and blog posts say $8.

~~~
zizee
They can get confused for sure, and pissed:

<http://news.cnet.com/2100-1017-245631.html>

One suggestion is to have your pricing page show a random price, but after the
user clicks "yes please" you tell them immediately that "actually, we are
having a discount today to $8", telling them the lowest price of the bunch.
The danger with this is that if people find out about it, it could taint your
test as they know that the displayed price is not the price they will be
charged at the end.

I'd be interested to hear if people have any other good ways to tackle this.
The only things I can think of ad extra variables to the equation (tainting
the a/b test) e.g.: write "limited time offer" next to the cheaper prices, or
run the different prices on different days.

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keiferski
Direct link to the interview: [http://thisweekin.com/thisweekin-venture-
capital/this-week-i...](http://thisweekin.com/thisweekin-venture-capital/this-
week-in-venture-capital-35-with-gregg-spiridellis-founder-and-ceo-of-jibjab/)

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aresant
Great headline, converted me.

Price elasticity testing is so crucially important and I consume everything I
can find about rationality vs. the seeming randomness (particuarlly for
digital products).

Even this single morsel tying rationality of consumer mind-set of $1 per month
is interesting.

~~~
zizee
Agreed, the headline was great.

If you like articles about pricing, I read a really good one last night:
[http://onstartups.com/tabid/3339/bid/37737/Secrets-Of-
Freemi...](http://onstartups.com/tabid/3339/bid/37737/Secrets-Of-Freemium-
Pricing-Make-The-Cheapskates-Pay.aspx)

Care to share any good articles you have read recently?

~~~
zizee
There is also a good ebook from Neil Davidson, that provide a nice overview of
how to price software. It's short and easy to read:
<http://www.neildavidson.com/dontjustrollthedice.html>

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reedF211
I was interested in the article until I realized they were promoting a Jason
Calacanis product and I just about threw up in my mouth.

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neovive
Do you think the same would hold true for an annual pricing model? For
example, moving from $999/year to $1,000 or $1,200 per year.

~~~
jdludlow
$12/year _is_ an annual pricing model. It's also a small enough number to be
an impulse purchase. At $1000, people are going to stop and think longer about
it, so it might not have the same effect. (I would still prefer $1000 to
$999.99 though.)

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parfe
I read the headline as $12/year then hit $9.99 and assumed it was per month
had to go back and reread $12/year.

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vegai
Every time I see a price like $x.99, I have to wonder if the salesperson
thinks I'm an idiot.

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rexreed
How does this line of thinking apply to monthly subscription fees? Does $12 a
_month_ have the same higher conversion rate compared to $9.99 a month as $12
a year does to 9.99 a year?

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JoeAltmaier
Whatever the reason, its definitely psychological. Nobody cares about a few
dollars a year - these same people are buying Cocoa Crispies at $6/box every
week.

