Which price is better: $29.99 or $30?
Most people, if they take the time to think, would say the two are pretty much the same.
However, in an interesting article at the BBC, marketing researchers say that shoppers make those price comparisons emotionally rather than logically.
One theory is consumers just aren’t up to the maths. Dr Jane Price, lecturer in psychology at the University of Glamorgan, says we “tend to put numbers in categories like ‘under Â£5’ or ‘under Â£6’ – rather than them representing a value. Shoppers are aware of what is going on, but don’t respond to it because they don’t think logically about how close numbers are – such as Â£99.99 and Â£100.”
She thinks shoppers tend to focus on the big denomination – which the pound sign draws the eye to – rather than the smaller denomination: the pence. There is also the emotional incentive – people like to feel they are getting better value for money.
I wonder if there’s any connection between these feelings and people holding on to the concept that buying more lottery tickets with the same “lucky” numbers will increase the odds of winning.
Is this pricing philosophy related to the illogic behind adding 9/10 of a cent to per gallon gas prices?
Anyway, then there’s also the fact that many people seemingly don’t even care about the pence at all.
For consumers, the saving is minimal and the copper coins they receive as change when paying with a note seem to be more of a hassle than a benefit – in 2005, Britons discarded or stashed away Â£133m [about $265 million] in unwanted coppers, according to Virgin Money.
Virgin Money? Is there a business that Richard Branson isn’t involved in?
I think I read somewhere that the cost of making a US penny is more than the coin is worth.
Man! This post is even more rambling and pointless than normal. :-)