OnDemand WTP Pricing Research

The psychology of pricing | RTE

If you’re shopping today, you’ll see prices that end in “9” almost everywhere. It has been suggested that the “99 effect” was introduced to curtail employee theft in the early part of the 20th century. It forced cashier and sales staff to open the tills for change thus reducing the chances of them pocketing the money.

Recent studies have shown that it is as effective as ever in getting customers to part with their hard earned cash. Why does it work? Surely, we all intuitively recognise that 99.99 is only a cent from €100? We read from left to right and the first number we see is 99 and that then becomes an “anchor” number in our mind and the change makes more of a difference that the value of the money.

Why are stores like Dealz whose products are less than €2 performing so well? Because we like certainty in pricing. If we have €10 to spend we know that we can buy five items in one of these stores. The certainty effect makes us feel secure knowing exactly how much we are going to spend.

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The psychology of pricing.

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