I know the arguments behind it, and I know the research shows it brings slightly higher conversions, but I always see charm pricing (e.g. 2.99 vs 3.00) as an insult of sorts to my intelligence.
It's like the company is saying they don't think their customers have the mental capacity to reason that 9.99 is effectively the same price as 10.
It's even doubly meaningless for some products in Australia, because with 5c being the lowest coin in circulation purchasing a single item worth $9.99 will be rounded up to $10 anyway.
Can't find it any more, but in some literature I was reading that actually it's not so clear as people think. In some situations -1ct works well in other situations other prices like $10.23 work much better. I don't remember the requirements, though.
In any case it's bad to do something that you haven't tested yourself for your market. So if you sell something try different prices and pricing strategies and see what works best.
What certainly works (but is illegal in many countries, I think) is price tagging something as $20 and offering 50% off.
Well, tfa says it pretty clearly: When asked to estimate the real value of TVs priced at 4998.10, 5000 and 5012.56 the middle one was estimated nearly $500 lower than the others.
Same goes for houses and other situations where you're likely to be conceived as having rounded up.
This says it clearly for TV prices in the interviewed customer segment and house prices in the interviewed customer segment. It doesn't mean that other situations don't do better with other prices.
Working in IT I have some friends who would pay $503.71 more for the same TV (compared to the price tag on the TV itself) if you present them a complex mathematical formula for why that TV should be valued higher, but who wouldn't pay $503.70 more because that's not what the formula says.
What I want to say by that example: Different people have different thinking and test your customers, don't assume you are right because a book says so.
Interesting. Wasn't something like this in the undercover used car salesman article a while back as well? You should always come up with weird numbers so the customer doesn't think you made it up.
Isn't it more like: "Turns out we can manipulate people"
Many of the arguments in the article are about subconscious behaviour. After reading all of these tricks for pricing tactics, I'd say it's rather like a magician fooling people with misdirection. No one likes to be fooled but you only notice it when it's too late.
>It's even doubly meaningless for some products in Australia, because with 5c being the lowest coin in circulation purchasing a single item worth $9.99 will be rounded up to $10 anyway.
While I agree these charm pricings are an insult to our intelligence, they do have a slightly positive effect on the final price. Firstly, the rounding to the nearest 5c only occurs on the sum of items bought (e.g. if you buy 3 items at $9.99 the rounded total is $29.95). Secondly, the rounding only applies to cash payments as electronic payments are not rounded.
It's like the company is saying they don't think their customers have the mental capacity to reason that 9.99 is effectively the same price as 10.
It's even doubly meaningless for some products in Australia, because with 5c being the lowest coin in circulation purchasing a single item worth $9.99 will be rounded up to $10 anyway.