Pricing Strategy: When $10 is Better than $9.79

Emotional purchases are more appealing with round prices.

Emotional purchases are more appealing with round prices.

 

Customers like a good deal when they’re shopping for a product. But can some prices “feel” better than others?

New research suggests that round numbers — like $10 — encourage buyers to rely on their feelings. More precise looking numbers — like $9.79 — encourage buyers to use logic and reason.

 

The Study

Researchers conducted a series of experiments to test the effect of rounding prices. They found that rounder prices like $100 were better when a purchase was driven by emotion — for instance, buying a camera for a family vacation. If, however, the camera was for a class project, the buyers preferred a non-rounded price like $98.76.

Similarly, buyers preferred to pay $40 for a bottle of champagne rather than $39.72 or $40.28.

When the buyers had to make a more utilitarian purchase — in this case, a calculator — they were more likely to buy it when the price was a non-rounded number. This was true even though the non-rounded price was higher than the rounded one.

 

Key Takeaway

These studies suggest it’s best to use round numbers when selling something with emotional appeal. For instance:

  • Vacation packages
  • Gourmet foods
  • Clothing
  • Houses
  • Coaching services or therapy

But when selling something more utilitarian, use a more precise number:

  • Anything B2B
  • Software
  • Appliances

As always, the caveat to test everything applies. Still, you may be surprised to find that you sell more at $600 than $597.

Monica Wadhwa and Kuangjie Zhang. “This Number Just Feels Right: The Impact of Roundedness of Price Numbers on Product Evaluations.” Journal of Consumer Research: February 2015.

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