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Precise Pricing Pays Off

In my time as a catalog marketer, I almost always priced products just below the next dollar increment – a cheap item might be $9.97 rather than $10, while a more expensive item may have been $499, or even $499.99, instead of $500. My strategy was based on a couple of assumptions. First, I thought that there was probably something desirable about offering, say, a “nine-dollar-and-change” price vs. a “ten-dollar” price, i.e., even though the difference was only a few pennies, some customers would perceive the $9.97 price to offer more substantial savings. Second, I observed that big marketers like Sears, who could afford to test any number of pricing options, tended to stick with the “just below the next increment” approach. As it turns out, I was right, but for the wrong reason. New research points us toward the reasons why consumers respond better to a $499 price vs. a $500 price, and it has more to do with the apparent precision of the odd number: […]

By |April 28th, 2008|

Get More for Your House with an Odd Price

I love research findings that run counter to intuition, or are at least unexpected, and the idea that you can get more for your house if you market it with an odd price is certainly unexpected. That’s what University […]

By |April 26th, 2008|

Why Expensive Wine Tastes Better

For Neuromarketing readers, it’s not big news that the perception of wine drinkers is altered by what they know about the wine (see Wine and the Spillover Effect, for example). Now, researchers at Stanford and Caltech have demonstrated that people’s brains experience more pleasure when they think they are drinking a $45 wine instead of a $5 bottle – even when it’s the same stuff. The important aspect of these findings is that people aren’t rationalizing on a survey, i.e., reporting that a wine tastes better because they know it’s a lot more expensive. Rather, they are actually experiencing a tastier wine. […]

By |January 16th, 2008|