Why Do Offline Prices End in Ninety-Nine And Online Prices End In Seven?

by Rezbi
31 replies
I wrote about this on my blog and I'm still looking for an answer.


Anyone got any ideas?



Have you noticed how so many prices in offline shops end in ninety-nine?
In the UK you might see a product for so many pounds... and ninety-nine pence.


In the US, likewise, you might see so many dollars... and ninety-nine cents.
I wouldn't be surprised if it's the same all over the world.


Why do you suppose that is?


Apparently, according to research (don't ask me whose), people have a natural tendency to round down the price of an item... especially if it's an item they want.


I know this to be true as I've seen many friends and family members do this.


They'd see a product priced at £29.99 and immediately say something like, "Oh, look, it's only £29″.


Being the logical (boring - when it comes to prices, anyway) thinker, I always correct them saying something like, "No it's not, it's one pence short of £30, which make it £30″.


They think by rounding the price down they're getting the item at a knock-down price.


Psychologists seem to think people also like the fact they get change when they buy something with such a price tag... personally I think that's a load of rubbish, the type psychologists commonly spout.


Another reason is, one that may make some sense, is that the price ending in the number nine makes it more attractive somehow.


(Don't ask me how that makes sense - it just does to me).


Possibly the best reason for ending the price like this is that it makes it possible to give the impression the item is cheap by saying things like...
Brand New Gobbledegook Top of The Range Car
'Under $10,000′
(I'm not advertising anyone till they pay me)
Of course, the fact the car is $9,999 doesn't matter as the seller isn't lying.


And, just by saying the car is 'Under $10,000′, they lure the customers in.
Of course, that doesn't always work... I know personally... as the customer can get a bit ticked off at the feeling of being 'duped'.


The question now is, if the use of ninety-nine works in offline businesses, why are online products always ending in seven?


Check out almost any product and you can be almost certain it will cost anything from $7 to $97... to $2997.


Why is that?


And why does it work?
#end #ninetynine #offline #online #prices
  • Profile picture of the author The Expert
    Some online Guru (Ryan Dice?) was quoted as saying that they did split testing and found that if they ended a product in a "7" that their sales increased X%.

    Other gurus started quoting him and then all of a sudden I heard it on like...4 different seminars that I burned to my iPod.

    From that point, everyone starts just doing it as they don't have the time to split test themselves and most people don't make enough sales on any one product that it makes a difference if they sell 200 products at $197 vs. $199 so they go with what they "heard" just to cover the bases.

    In short...it's a Internet Marketing urban legend.
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    • Profile picture of the author se7en
      Se7en is just way cooler
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    • Profile picture of the author Rezbi
      Originally Posted by The Expert View Post

      In short...it's a Internet Marketing urban legend.
      So there's no substantial tests done to confirm any of this?

      How about the offline prices... does anyone know of any research on this?
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    • Profile picture of the author bgmacaw
      A lot of prices at WalMart end in $x.97. They do this rather than the traditional $x.99 so that they can appear cheaper than Target, K-Mart or other competitors, even if it's only by 2 cents.
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      • Profile picture of the author Mike Shain
        Personally I am tired of all the 7's but what are ya gonna do?

        Another thing that bugs me is that pricing jumps from $67 to $97 - can something not be worth $77 or $87?

        I think we should start a new trend and follow the lead of offline marketing...

        We should double their ebook order - they just pay seperate processing.
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      • Profile picture of the author Rezbi
        Originally Posted by seasoned View Post

        WRONG! They were doing it when I was a little kid, and that was BEFORE ethernet! For those that don't know what ethernet is, it is the hardware design that basically most networking today revolves around. tcp/IP is based on it, and generally runs on it.

        In short, it is OLDER than the internet!

        Steve

        I take it you're referring to bulletin boards?
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  • Profile picture of the author Paul Hancox
    Hi Rezbi

    Here is a sample of my book "Pricing For Big Profits", in which I address that question of the x.99, and also why Internet marketers tend to use x7:

    http://www.pricingforbigprofits.com/sample1.pdf

    Please note, the above is a PDF document, so may open Adobe Reader if your browser doesn't automatically open PDF documents.
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    • Profile picture of the author Frank Donovan
      Hi Rezbi

      For someone offering "Scientific Advertising" in your sig file, you shouldn't be so quick to dismiss the psychological impact of price points on potential customers

      The .99 price has been commonplace in the offline retail environment since shops began. People will tend to focus on, and attach more significance to, the first figure of the price.

      There was also the argument, put about by larger retailers (i.e. those who employed staff) that a "round number" price was too much of a temptation for some dishonest sales staff to occasionally pocket the note instead of ringing the price up on the till. If they had to give change, albeit just 1 cent, then they were forced to ring up the sale in order to open the cash register drawer.

      Of course, since the advent of plastic money, that argument has lost a bit of its strength :rolleyes:

      Regarding the .7 endings of online products, I'd certainly recommend Paul's report (mentioned above) for insights into that phenomenon and other pricing strategies.

      You might also get some ideas from this thread:

      http://www.warriorforum.com/main-int...ers-doing.html



      Frank
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      • Profile picture of the author Rezbi
        Originally Posted by Frank Donovan View Post

        Hi Rezbi

        For someone offering "Scientific Advertising" in your sig file, you shouldn't be so quick to dismiss the psychological impact of price points on potential customers
        Hey Frank,

        Thanks for you reply.

        I haven't dismissed the relevance... just wondering if there's some solid research data as to why these figures work.

        I'm just curious that way.
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    • Profile picture of the author Rezbi
      Originally Posted by Paul Hancox View Post

      Hi Rezbi

      Here is a sample of my book "Pricing For Big Profits", in which I address that question of the x.99, and also why Internet marketers tend to use x7:

      http://www.pricingforbigprofits.com/sample1.pdf

      Please note, the above is a PDF document, so may open Adobe Reader if your browser doesn't automatically open PDF documents.
      Thanks for that Paul.

      I hadn't thought of the £ and 99p stores, realise now that I've been a victim as much as anyone else and tend to bypass the £1 stores if there's a 99p store nearby.

      Love your copywriting products, by the way.
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  • Profile picture of the author Shaka
    The first time I heard of product pricing ending in the number 7 was about 1992. At that I was an avid reader and fan of copywriter Ted Nicolas. He was the king of traditional print advertising at the time and believed in constantly testing every variable of a promotion to increase response. While testing different price points he noticed that regardless of price the response increased when the price ended in .07 or 77.

    However, with this practice or any other, Ted Nicholas' advice to all marketers is to test, test, and test some more to determine what works best for you.
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  • Profile picture of the author Dan C. Rinnert
    Originally Posted by Rezbi View Post

    Apparently, according to research (don't ask me whose), people have a natural tendency to round down the price of an item... especially if it's an item they want.
    Gas prices are an excellent example of that.

    Around here, the gas prices are always an amount plus 9/10's of a cent. So, gas prices will be listed as, say, $2.499, per gallon. To me, that's $2.50 per gallon. Sure, you save a penny every ten gallons, but for all practical purposes, it's $2.50 per gallon.

    Yet, people will go around saying gas is $2.49 per gallon.

    Maybe it's not a big deal, but it's certainly an example of people rounding down.
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    • Profile picture of the author Magic Johnson
      Go to Amazon.com: Online Shopping for Electronics, Apparel, Computers, Books, DVDs & more and check out how many of their products sold end with the .97 figure.


      To save time, do not visit amazon.com, because:


      Myth Officially busted.

      The Guru's have sold us on the .97. but we have to step out
      of this cage, and test with our own prices, on our own.

      It's been going on for 4-5 years now, as I can remember.

      I feel it's one of those myths that sneak up on us with being
      part of a tight community, and we
      stop stepping our feet outside to see new price perspectives.

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  • Profile picture of the author cimbah
    I always round up, not down. I also mentally add in tax on items that are taxed.

    I agree with Dan, $2.499 for a gallon of gas is really $2.50.

    Another thing in stores is the sales racks often say something like "$9.99 and up" and you may find one item on the rack that is actually $9.99 with everything else being more.
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      • Profile picture of the author AndrewCavanagh
        Because many, many years ago an excellent offline direct response copywriter and marketer Ted Nicholas reported his testing that showed that prices ending in 7 pulled better than other prices.

        Of course this was quite some time ago and was offline testing in direct mail.

        Online the same isn't true but that tip has been handed down so many times that people think it's true.

        The reality is marketers are just throwing away $2.99 with every sale.

        A $9.99 ending pulls just as well as a $7 ending to price online.

        Kindest regards,
        Andrew Cavanagh
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    • Profile picture of the author Rezbi
      Originally Posted by cimbah View Post

      I always round up, not down. I also mentally add in tax on items that are taxed.

      I agree with Dan, $2.499 for a gallon of gas is really $2.50.

      Another thing in stores is the sales racks often say something like "$9.99 and up" and you may find one item on the rack that is actually $9.99 with everything else being more.
      In my experience when people want the product in question they round down, but when they don't really care, they round up.


      I guess by rounding down they're justifying the cost in their own minds in order to make it seem cheaper.
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  • Profile picture of the author braver55b
    I got if from a Ted Nicholas book that I should end my prices with a seven as he says that it increases sales,

    Here is a man who has sold products in the hundreds of millions of dollars, so I'm not going to argue with him on that one. So that's what I've been doing for years, even in my current WSO.
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    • Profile picture of the author MaskedMarketer
      Originally Posted by AndrewCavanagh View Post

      Online the same isn't true but that tip has been handed down so many times that people think it's true.
      not totally true.

      I think it was Ryan Deiss was the one that split tested numbers ending in 7 and the response was higher when the number is ending in 7. Meaning $17 would make more money than using $19. Just like when Ted Nicolas split tested and saw higher conversions, so did Ryan Deiss. Lots of similarities online and offline.
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      • Profile picture of the author AndrewCavanagh
        Originally Posted by MaskedMarketer View Post

        not totally true.

        I think it was Ryan Deiss was the one that split tested numbers ending in 7 and the response was higher when the number is ending in 7. Meaning $17 would make more money than using $19. Just like when Ted Nicolas split tested and saw higher conversions, so did Ryan Deiss. Lots of similarities online and offline.

        Interesting.

        Our split testing on quite a few products with serious statistical significance suggested there was very little difference between the number 7 or the 9.99 ending to a price.

        If anything the 9.99 price pulls a little higher.

        You do have to keep in mind that trends can change over time.

        What gets overused today becomes less effective tomorrow.

        The only way to know for certain is to split test it in you specific case with your sales letter.

        Kindest regards,
        Andrew Cavanagh
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        • Profile picture of the author Rezbi
          Originally Posted by AndrewCavanagh View Post

          Interesting.

          Our split testing on quite a few products with serious statistical significance suggested there was very little difference between the number 7 or the 9.99 ending to a price.

          If anything the 9.99 price pulls a little higher.

          You do have to keep in mind that trends can change over time.

          What gets overused today becomes less effective tomorrow.

          The only way to know for certain is to split test it in you specific case with your sales letter.

          Kindest regards,
          Andrew Cavanagh
          Now, this is what I thought.

          I know that something priced at *.99 is more attractive to me, personally.

          However, I must admit as Paul mentioned, the number 7 itself is more attractive, not necessarily as a price figure.

          And, incidentally, number 3 is my second favourite.
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    • Profile picture of the author jasondinner
      Originally Posted by braver55b View Post

      I got if from a Ted Nicholas book that I should end my prices with a seven as he says that it increases sales,

      Here is a man who has sold products in the hundreds of millions of dollars, so I'm not going to argue with him on that one. So that's what I've been doing for years, even in my current WSO.
      Not picking on you braver, but using your post as an example.

      A lot of us are guilty (myself included) of just taking what other experts say as gospel
      without doing any testing on our own.

      So just because someone says it has worked for them doesn't mean it's going to
      automatically work for you.

      My advice is if you really want the best result for your sites in your business, you
      should do your own testing.

      Use other successful marketer's results as a reference, but don't accept it as gospel.

      - Jason
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  • Profile picture of the author chazmer
    I think it's primarily so that companies can say "under $xxx" it is a psychological thing that if they think about it being under x amount then it seems cheaper. However putting a strange price can be surprisingly effective
    "Brand New car! only $10378" people focus more on the 378 than you'd think.. helps to stick it in there
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  • Profile picture of the author Dally137
    I know a bit about this. In terms of marketing they say it provides the customers a bargaining opportunity. I mean people feel a little bargain in the 99 thing. its the first expression of the price that attracts any sort of customer.
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  • Profile picture of the author Franck Silvestre
    I start to use the seven after reading Ted Nicholas stuff.

    But prices should be tested anyway.

    Franck
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  • Profile picture of the author Paul Hancox
    Bottom line is you should TEST your own prices. Even if $x7 does better, it doesn't mean that's the best price anyway... it all depends on what you want to achieve.

    For example, if you want a BIG LIST of paying customers to later sell higher priced products, maybe $1 or $2 would be better for achieving that!

    Incidentally, I think the real reason that $x7 seems to work so well, is that...

    Out of the sequence of numbers,

    1 2 3 4 5 6 7 8 9 10

    ... 7 is the most popular (with 3 the second most popular). If asked to pick a number between 1 and 10, statistically we choose it more often than the other numbers.

    Plus, human life is associated with the number 7, such as the 7 days of the week, around which our life revolves.

    For that reason, we're more drawn to 7 than the others.

    So it's no surprise to me that prices ending in 7 have more "pull" than others.

    Paul Hancox
    Pricing For Big Profits - Special Report by Paul Hancox
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  • Profile picture of the author alanmag1983
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    • Profile picture of the author Paul Hancox
      Originally Posted by alanmag1983 View Post

      That could be the reason Paul, but I also think it's the mindset that your closer to "5" than "10". If something is priced at $29, $29.95, or $29.99, then that is right under $30. But if it's $27, then the person sees the number as being closer to $25, and that seems more affordable.
      Great point, about the "closer to 5 than 10" thing. I agree 100%. (Or if it helps, 77.77% )
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  • Profile picture of the author pearlydean
    You do realise that 97.77% of statistics are made up don't you?

    It's a tough one about price points. I tend to round up when I see $97 or £4.99 etc. The problem is does everyone else? I split test all of my price points and have tested $50 instead of $47 and $47 converts about six times more.

    It's a question of do you run with the herd because they know where they are going or do you dare to be different...but maybe not make as many sales?

    A good quote from Make Your Site Sell by Ken Evoy (an old classic!) ...

    "It's not necessary to be an expert on pricing. No error is fatal. You can always change the price tomorrow - those who remember that the Web is perfect for super-cheap experimentation have a huge edge.."

    Just my 0.97 cents

    Cheers
    Keith
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  • Profile picture of the author Steve Peters Benn
    Rebzi,

    I'm afraid you havn't been looking too hard. Have a wonder around your local ASDA / Walmart centre...
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    • Profile picture of the author Rezbi
      Originally Posted by Steve Peters Benn View Post

      Rebzi,

      I'm afraid you havn't been looking too hard. Have a wonder around your local ASDA / Walmart centre...
      Stvee,

      Just checking an Asda receipt (my local), there's quite a varied pricing structure.

      Maybe it's just this one receipt I'm looking at, but the lower priced items seem to mostly end in 7 with the higher ones ending mostly in 9.

      What do you make of that?
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