Attention shoppers: beware of the naughty nines

After spending three hours body-checking other shoppers in pursuit of the best prices on a blustery February afternoon, my head’s spinning with numbers — one in particular. When I close my eyes, all I can see are 9s with a leading dot.

Egad! Could a simple, innocent combination of characters be the true source of all my shopping frustration?

The more I think about it, when it comes to the shopping experience, maybe Schoolhouse Rock did call it correctly in 1973 when they introduced us late baby-boomers and Gen-Xers to the “Naughty Number Nine.”

Now is there some mystical reason why merchants can’t just make it simple and price everything to end in zeros (in other words, $2.00 versus $1.99)? Of course there is — in fact, there are several. And they’re all part of something called “psychological pricing.” (Okay, I already see some of you rolling your eyes at another “buzzword”.) Let me assure you, this is no passing fad. Psychological pricing has likely been in play since the first recorded ka-ching. And from its name, you can tell it’s out to get not only our minds, but our money, too.

Psychological pricing (also referred to as “charm pricing,” “price ending,” “fractional pricing” and “odd-even pricing”) contends that customers respond better to certain types of prices. This, of course, makes them more likely to buy items reflecting those prices.

Whether historical fiction or truth, Melville Stone is generally considered to be the father of the .99 price model . As the general manager of the Chicago Daily News in the 1870s (the first “penny paper”), Stone lobbied shopkeepers to price their goods at either 99 or 59 cents, on the hope that the leftover change could be used to buy his Daily News.

So what considerations prevail behind psychological pricing? Plenty, and the logic is all over the board (what — you were expecting this to be simple?). The following are some examples of how the pricing pundits might use the number 9 to their advantage:

9 conditioning.Professor Robert Schindler of the Rutgers Business School studied prices at a women’s clothing store in 2001. He concluded that the one-cent difference between prices ending in .99 and .00 had “a considerable effect on sales,” with prices ending in .99 far outselling those ending in .00. (In the example of $1.99 vs $2.00, clearly the first is cheaper; the .99 suffix becomes a conditioned “trigger” for a better price.)

Under limits.The power of the 9s isn’t limited to smaller-ticket items. Homes selling for $299,000 often sell faster than those costing $300,000. This is because it’s under (barely, but still under) the upper limit of a standard house-selling range, say $250,000-$300,000.

Left-digit effect.The “left-digit effect” (sounds like a movie title) recognizes that the first digit viewed in our left-to-right reading environment is the one that’s retained by the viewer. $7.99? Nah, lemme tell you, you’re really thinking $7. Digit order, it seems, does rule. Vicki Morowitz, president of The Society for Consumer Psychology, says, “We encode it in our minds before we read all the digits.”

Consumers always want to get the best deal at the lowest price. The following study from the Massachusetts Institute of Technology (MIT) and the University of Chicago presents a simple case of the
9s in action
. They created three versions of the same mail order catalog, each containing an identical women’s clothing item, the difference being its listed price in each catalog: $44, $39, and $34, respectively. Guess which one sold more often? The $39 dress (maybe not what you were thinking, eh?). Researchers concluded that shoppers perceived $39 as being a steal for a (perceived) $40 dress, whereas $34 was subconsciously aligned with overpaying for a (again, perceived) $30 dress. It’s all in where the relative round-number price points fall.

So maybe there has been a grassroots effort lurking in support of simplified pricing. With the advent of “dollar stores” (Dollar Store, Dollar General), maybe there is some love out there for “double-oh” after all.

It would be fun to go back in time to the 1870s and share with Stone how his 0.99 model has served as the inspiration for an influential pricing tactic. I’m thinking that if it were up to him, a penny for his thoughts would run you about 9/10ths of a cent.

What do you think of a price ending in .99?

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About the Author
Peggy White-Davis is a freelance and technical writer who lives in O'Fallon, Missouri. In addition to traveling with her husband, she is not afraid to strike out on her own in search of new and exciting vistas. Peggy is also a published music arranger. When not writing, she volunteers as a biographer for hospice patients in the St. Louis, Missouri area.
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