Ask HN: $4.99 VS $5 - Does odd number pricing work?
I'm thinking about how to price a project I'm working on and I'm curious to know if anyone has any data from their own experiences to show whether a $.01 price difference really has any impact on conversion rates.
On the one hand, odd number pricing is touted as an effective psychological trick to get consumers to think that the price of a product "isn't really that much."
On the other hand, I personally appreciate the simplicity and honesty of seeing a nice round number.
Does anyone have any data to support one tactic over the other?
18 comments
[ 3.4 ms ] story [ 49.8 ms ] threadOne size does not fit all.
”Amazon has run A/B pricing experiments, and learned the hard way that customers do find out, and are upset about it. So their new policy is: if they run a price experiment, you’ll always get the lowest price in the experiment, when you get to the checkout. (So you might click on something with 5% off - when you get to the checkout, it’ll give it to you for 10% off, because that was the other offer that you didn’t see).” -AndrewMcG
Here's a link to the pretty extensive study that two guys from Cornell published -- Heuristics in numerical cognition: implications for pricing http://forum.johnson.cornell.edu/faculty/mthomas/HeuristicsI...
On a semi-related note, I remember telling all my friends in the music biz how iTunes was making a huge mistake by crossing the $1 threshold when they jumped up from $.99 to $1.29 ... at <$1, fans didn't think too much about the purchase. once they crossed it, it only accelerated the progression of pirating.
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OT: This is good on setting prices, consumer surplus, etc..
Some quick user feedback over the last 2 weeks, where I showed people a slide about what the service is and then asked them how much they would pay revealed that a subscription of £5 would be too much. Most people who said they would pay replied with 'I would definitely pay £2 of £3 for that'.
Obviously this is only relevant for my startup but I wanted to ask a few people how much they would pay without giving them options.
Now that I have a ballpark figure I'll ask different people how much they would pay, but this time give them options - ie, the £3.99 vs £4 thing.
If an item costs $10 the till worker can pocket the money without recording the transaction. However if the product costs $9.99 the customer is due 1 cents change so the item has to be checked into the till and the purchase recorded, making an employee theft traceable as the tills will not add up at the end of the day :)
Apparently they had to send the receipt and the money via pneumatic tube back to the office where they would file the receipt, make change, and return it to the register. Customers would wait for their penny, helping to keep the employee from pocketing the cash and destroying the receipt.