Bargain prices - 1 cent cheaper

[Marq]

In the old days - Ok many years ago - Right...some time back, the price of an article used to be dropped by 1 or a few cents in the stores mainly as a check to force the cashier to give change out. It was a trick to try and bypass the pocketing of money by those lining their own pockets. I have often wondered whether this original reason for reducing the price also got the consumer into seeing a different cheaper price. How often do you get people rounding things down? Especially when asked by the husband as to what those shoes cost.....oh I digress.

I like things to be simple - R100 rounded off to R100 is simple is it not? But does R99 make it 'cheaper' and would this sway your choice as to which supplier you would buy from? Being bad at maths also helps the simple solution. I mean, how much does 2 of those things cost at R99? I know the answer straight away when its R100 - but R99? Give me the R100 story -I can work with that. But apparently most people..well ok 50%.. can either do maths or they see the cheaper angle.

In a huge study (well it was huge for them, I am sure) of this phenomenon, it has been 'proved' that the 99cent option is good for business Check it out here.

What do think about this? Is it just a cheap (pun intended) trick or does the average consumer see life differently to me?

[Dave A]

In the old days - Ok many years ago - Right...some time back, the price of an article used to be dropped by 1 or a few cents in the stores mainly as a check to force the cashier to give change out. It was a trick to try and bypass the pocketing of money by those lining their own pockets.

I didn't know that. Fascinating. Thanks, Mark.

I thought the research was in on this - most people consider R99.00 as substantially cheaper than R100.00. To the point that when they talk about it they go "It's only ninety rand."

I remember being told this psychological ploy and ever since, if something is priced ninety anything, I mentally round up to 100 and I talk about it that way. So when I ask my wife's opinion on buying a R95.00 pair of shoes, I'll say they are R100.00.

I vaguely recall that R99.95 was also psychologically perceived/received more favorably than a price like R98.95.

[Marq]

This just arrived fresh in my inbox:-

Revised Rates
CityGuideSA.com has recently revised its membership pricing structure to make it more transparent and fair. [So what was it before?] This has resulted in a tripling of costs for major hotel operators, but the GREAT NEWS is that it has also allowed us to reduce our membership costs for Guesthouses and B&B's by a huge 20%.[Thats right - good marketing angle - let the Hotels know they are really paying for the rest of the world]

This means that you can now enjoy all the benefits of membership from only R999 [Ah From...mmmm]per year.

This is less than R1,000[Yeh Really?- even I worked that one out] to be on Southern Africa’s most popular commercial....bla bla bla

This R1/1 cent story is surely so overused now that it does not make a difference to me any more? In fact I am looking for the con every time. Besides the other bs in this copy, who would believe them? Thats why I raised the point - Are the crowds still fooled out there?

[Dave A]

Are the crowds still fooled out there?

That seemed worth setting up a poll for. Let's find out what the TFSA locals think.

[Chatmaster]

It has never worked on me and doubt it ever will. In my mind I just round it anyway. I do remember my mother studying every newspaper and writing down where she would buy her groceries and even if it was 1 cent cheaper she would go through the effort of buying it at that specific shop just because it was cheaper. It has never made any sense to me though.

[Dave S]

1-cent cheaper, my eye, the difference between R9.99 and R10.00 is not 1-cent, it is actually 4-cents... Our smallest coinage is 5c, go figure.

[Dave A]

Here's a thought. If you go to the till with 5 items marked x.99 you only save the 5c as shown.

But if you pay for each one individually, with the rounding down effect you can save 25c

Moral of the story - pay for each item individually at the check-out and save!

[wynn]

R9.99 sounds cheaper than R10.00 if you say it quickly enough and dont think about it.
but the rounding down to R9.95 feels like a bonus.

I also round it up, psychologically it makes sense because a bargain is something you NEED that you can get cheaper, not something that sounds cheaper that you may not want.
In the past I have been known to offer the company concerned the 1c just to be sarcastic and make the point.

[Alvin]

I think we need some ladies' opinions on this matter, 'cos it sounds like all the guys are rounding up. My wife often will come with a story of "it's only R99". I, on the other hand think in my mind "What? 100 bucks for that?!!"..... See my point?

Perhaps the marketers are targeting women with this 99 story. In my opinion, .......and I'm probably gonna be knocked on the head several times for saying this (by women) ....... men see the cost of an item, whereas women see the saving.

[hattielee]

sounds reasonable .

[derrickm]

In the Internet marketing world, people have become used to prices ending in 7, ie. $7, $17, $27, $47, $67, $97 - all the way up to $997 (or $4997 if you like!)

People who have taken the trouble to actually test their results have had contradictory results - this is a short report by Tim Gross: http://www.internetmarketingcourse.c...pickaprice.pdf

I'm not sure that that example is entirely valid, as Tim allows customers to choose the price they're willing to pay. However, it does indicate that pricing choices are not as cut and dried as most people believe.

Tim basically concludes that the most profitable price for his $39.97 product (for the purposes of the test) is $10. But he's not comparing it with, say, $9.97.

James Brausch maintains that the most profitable prices are made up of the following digits: 0,1,3 and 5. So the best prices to test would be: $1, $3, $5, %10, $13, $15, $30, $35, $50 and so on.

I think the key is testing. Pricing expectations differ from market to market - it's shortsighted to make assumptions about your pricing strategy.

Derrick Markotter
www.targetedleads.co.za