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?
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I've been wondering the same thing at a very similar price point too. I am thinking about a monthly subscription at either £3.99 or £4.99.
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.
I have a theory (just a theory) that .99 pricing was introduced to prevent in house employee theft.
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 :)
http://www.neurosciencemarketing.com/blog/articles/neuro-menus-and-restaurant-psychology.htm ↗ - is thin on evidence and designer focussed (summary 9 rather than $8.99) but a good starting point.
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OT: This is good on setting prices, consumer surplus, etc..
I've done this analysis but the study overall was faulty and in the end discarded for unrelated reasons, but we found 9.99 is better than 10, but best is 9.95.also that 59 is a bad number. You will get a lot more volume with 29 than with 34.95, or even, get this, 39.95. This was in non technical consumer space.
It can be huge depending on your target market and the psychological nature associated with the product. Look at a pricing study it's quite amazing how much a few cents can make a difference. I always do psychological testing (a form of A/B testing) to determine the optimal price.