Consumption

Whether in our stores or online, we no longer take into consideration the labels and prices tags ending in 9 or .99? Coincidence? Or a scientific method?

In fact, it's simply the application of the technique called 'odd pricing', which consists of setting prices one notch below round prices. But does this old recipe always work?

The answer is yes. A price ending in 9 is in fact immediately associated by the potential buyer with a good deal, unless all the prices in the same store end in 9, in which case the bargain effect is cancelled out.

Another phenomenon at work in the following: level effects, that is to say the way in which the buyer reads the price: most consumers will tend to round it down to the nearest whole number. Thus, a price of 3.99 euros will be mentally ranked at the same level as a price of 3 euros.

A study looked at the effects of these "magic" prices for sellers by comparing the effects on sales of prices ending in ".88", ".99" and ".00" in a women's fashion online shope.

Sales of items with a price ending in ".99" were found to be 8% more than those of items with a price in ".00". But, strangely, this doesn't work as well with prices ending in ".88". Empirical findings show that it's prices ending in ".99" that trigger more sales. It seems that what matters is that the consumer has the "impression" that the products are at a "good price", an impression that pushes them to buy it.

The same mechanisms are triggered when the starting price and the final price are displayed and consumers are looking for the best deal. Consumers "consider the $93-79 pair more advantageous than the $89-75 pair (while the discount is the same)."

One explanation for this preference is that consumers mentally perform a subtraction operation between the first digits of the price."This gives 9-7 = 2 more advantageous than 8-7 = 1", explains the study 'Effects of prices ending in 9 on consumer choice', published in 2013.

This is why the display of "magic" prices has become the rule and a real pricing method that aims to maximize profits by making small adjustments to the price structure.

This method is based on the assumption that consumers don't like to do calculations and therefore only read the first digits of a price when making their purchases. Thus, they draw their information mainly from the first digits of the price rather than the last ones; in other words, it's the order of magnitude that matters to them. So, to them, a price of 17.99 euros seems closer to 17 euros than 18 euros.

(MH with FL - Source: Science & Vie Special issue n°299/Picture: Chloe Evans via Unsplash)