Apr 15th, 2008
Why Things Cost $19.95
Scientific American has an article about Why Things Cost $19.95. They find that the more precise the price, the less likely people are to negotiate over the value. While the evidence they suggest supports what I believe, I disagree with their conclusions.
They say that we’re more likely to believe in “$19.95″ pricing because we’re “thinking in cents” rather than in dollars. I believe that it’s because we believe precise prices are derived from precise means - from accurate portrayals of time & materials and profit margins. When we see a round number we think “Oh, they just made that number up, we can negotiate that,” but when we see a precise number we think “Well, that must really be the value of it.”
Read my post on $19.99 vs. $20.
Read: Why things cost $19.95
I always get in shit from the wife because whenever I see a $169.00 price I always round down:
“It’s only $160″
“No, it’s $170 you ideeeeeot!!”
“Oh, yeah, right..”