why $1.97 and not $2.00

by rhondaklewis 55 replies
I am getting ready to sell some products and was looking at a few sales pages that offer their products for $1.97 or $4.97. Is that a pyschological marketing technique or just a personal preference, or maybe there is another reason.
Rhonda
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  • Profile picture of the author JeffersonB
    It's all phychological.
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  • Profile picture of the author Marian Berghes
    its a pyschological thing, makes the customer think that its cheaper and he gets something for a small amount of money
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    • Profile picture of the author Lance K
      Originally Posted by Rhypo View Post

      its a pyschological thing, makes the customer think that its cheaper

      THINK? $1.97 IS cheaper than $2.00.
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      • Profile picture of the author Lance K
        OK, here's my thinking. Somewhat similiar to John's and I agree that testing is the route to go.

        Another thing that is pure speculation on my part...A price that is just lower than bill denomination is part of the power.

        For example, in the U.S. we have bills in the amount of $1, $5, $10, $20, $50, & $100. I purposely left out $2 due to it's infrequency of use.

        Therefore, prices of $0.97, $4.97, $9.97, $19.97, $49.97, & $99.97 have the most psychological impact because you can pay for your purchase with a single bill. Again, pure speculation, but I've personally had such thoughts when I buy things. Even if I'm not paying cash. And knowing full well that tax is going to put me over.

        But on the surface, when I'm making the buying decision, I'm getting the product/service for a price that I can pay with a single bill. Whether .99, .97, .95, etc. is better would have to be tested.

        And here's the wierd thing. I personally think in intervals of $5 minimum. Again, this is probably due to being trained to accept the denomination of U.S. Bills. So, I'm no more likely to buy your offering at $8.97 than $9.97. In fact, I may be less likely. Because, $8.97 brings thoughts of more change cluttering up my pocket.

        However, if 2 identical products are offered at those prices, I'll buy the cheaper one because I'm able to compare them. Once I determine that they are indeed the exact same offering, of course I'm going for the least expensive one. But as a stand alone with no comparison, I'd likely be more apt to pay $9.97.

        To me personally the "power" of being able to pay for something with a single bill is not only satisfying, but also simplifying.

        Maybe I'm nuts. Maybe I'm right. Maybe I'm both!

        P.S.
        I've heard the old logic of using decimal pricing up until $100 and then going to whole dollar pricing for anything above. Personally, I like whole dollar pricing for anything above $20. At which point, to me it doesn't make a difference whether the price is $47 or $49. As long as I don't have to think about hearing metal jingle. And as long as it's priced close enough to that bill denomination so that I can visualize that single bill in my mind. Then I know that I can get what I want with that single bill.
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        "You can have everything in life you want if you will just help enough other people get what they want."
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      • Profile picture of the author vorales
        Its all physcological way of influencing the customer. Same thing happen in hypermarket or supermarket. For certain things, it matters especially the daily use items. I myself use to compare the price if I go for shopping. But certain thing that we only buy once a while it doesn't matter, 3 cen different is nothing.
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        • Profile picture of the author kcgeorge
          Of course,it is psychological because it makes me feel am buying at a cheap price,personally speaking.The balance from the $2.00 will do for something else-it's makes part of of the account balance-isn't it?
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          • Profile picture of the author zeurois
            My explanation

            I've read somewhere that people read only the first part of a word.

            For instance, if you write down "Dogs cannto see coloros", someone who reads this will get the idea ("dogs cannot see colors") even though it's mispelled. So he information is taken from the fist part of a word.

            Therefore, if you write $1.97 instead of $2.00 it's still around $2, but it's seen as $1
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      • Profile picture of the author Ken Strong
        Originally Posted by Lance K View Post

        THINK? $1.97 IS cheaper than $2.00.
        See how well it works? They fooled you, too.
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  • Profile picture of the author Peter Bestel
    Yes it's psychological but it's been tested and $1.97 converts higher than $2.00 But don't take my word for it - test it for your market.

    Peter
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    • Profile picture of the author zeurois
      Also test .95 against .97 (or other combinations)
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      • Profile picture of the author Lokesh Sharma
        Banned
        Its a proven fact that $1.97 converts better than $2.

        I don't remember where but I was reading that figures with 7 in them converts better.

        The guy there said $45 won't convert better than $47.

        The same way I'm used to see figures like $7, $17, $27, $47, $67 and $97.

        Even the big guys have there products for $1,997. Now tell me if it matter to them if they make it $1,995.

        Thus I believe its the psychological power of the number 7 that makes marketers use it.

        However, I use 7 in my prices since everyone else does and thats gotta be the reason most of the marketers would use $47 over $50.

        - Lokesh Sharma
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  • Profile picture of the author John Taylor
    Originally Posted by rhondaklewis View Post

    I am getting ready to sell some products and was looking at a few sales pages that offer their products for $1.97 or $4.97. Is that a pyschological marketing technique or just a personal preference, or maybe there is another reason.
    Rhonda

    Where the price is below $10 it may not have a significant
    effect on conversion rates.

    However, the only way to know the real answer is to split
    test two alternative prices and see what your results yell
    you.

    John
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    • Profile picture of the author rhondaklewis
      Thanks everyone. I never thought of testing. All I know is that I have bought products for .97 price but would have just as easily paid the .00 price as well.
      Rhonda
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  • Profile picture of the author Earl Smith
    Psychological all tha way it sounds cheaper when when you say 1.97 instead of 2.00
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    • Profile picture of the author azlanhussain
      Yes it's about the psychology effect. But I guess it only happens in countries where the money is in a smaller numbers. In Indonesia, where $100 is equivalent to nearly 1,000,000 Indonesian Rupiah, then it would be no difference as you will never have the chance of having 0.97 playing the mind game.

      Just thought of sharing..

      Cheers,
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      • Profile picture of the author TmSmith
        Yeah it the same as those infomercials that sell things for 3 easy payments of $19.95 it's still $60 (only $.15 cheaper) but people see the small number and that is what sticks in their head.

        Another trick of marketers and infomercials is the price cut. You know "The regular price is $97 but for a limited time I'm offering it for $27 + extras".

        It is to create urgency and convince people that if they don’t buy it now they won’t het the best price.

        Just my two cents,
        Tommy
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        • Profile picture of the author rhondaklewis
          I think I will add the price cut idea and offer bonuses also. Thanks for the idea Tommy.
          Rhonda
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  • Profile picture of the author Woody C
    Studies have been done showing that prices that end in an odd number or uneven number are viewed as being a better value.

    Prices that are whole numbers or tend to end with an even number are viewed as being a luxury and therefore more expensive.

    That is why most prices are $97 or $1,997 and not $100 or $2,000. They want people the think they are getting a good value for the price.
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    • Profile picture of the author wbakhos
      Originally Posted by Woody Crenshaw View Post

      Studies have been done showing that prices that end in an odd number or uneven number are viewed as being a better value.

      Prices that are whole numbers or tend to end with an even number are viewed as being a luxury and therefore more expensive.

      That is why most prices are $97 or $1,997 and not $100 or $2,000. They want people the think they are getting a good value for the price.
      I think thats an excellent answer.

      I understood why people you 7 so much... but i think its a little overwhelming now.. but if it works.. why not?!
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      • Profile picture of the author Jeff Henshaw
        It's all phychological.
        I don't normally post without reading an entire thred, so If this has been already posted - just ignore me.

        In the UK when buying off line the price pitch normally ends in "99". Now as I understand this, the reason is that in the days (long ago) when tills were being introduced to shops (stores) they gave out a loud ring after a transaction and when the money drawer opened. Once opened, the till operator would deposit the money and give back any change due.

        The idea of the .99 was that no one could walk out of the store with goods, unless the shop owner had heard the till ring.

        What that means is that the till operator could not simply take the money (if given in round figures, whether note or coin) off the purchaser, then say thank you and pocket the money, but rather, the purchaser would expect to hear the till ring (as would the store owner) and expect to get their penny, cent or whatever change.

        On the Internet however, in B2B circles, we are conditioned to the "97".

        Well, I hoped that you enjoyed my explanation (I believe it to be true), but if not - it ought to be!

        Just my small contribution.

        Regards,
        Jeff Henshaw.
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  • Profile picture of the author DavidTheMavin
    Marketing 101, although I'm not sure what's better: .99, .98, .97 or .95?
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  • Profile picture of the author dvduval
    So if I am charging $30.00 for my product now, would it help to change the price to $30.95?
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    • Profile picture of the author Blase
      I just read an article in some marketing pub, sorry
      I read so many I don't remember where it was.

      But, they said they tested $9.95 against $10.00.
      $10.00 won.

      Now don't take this for gospel do your own test.

      There is so much untested recycled crap out there
      it's sad.

      Ted Nicholas said that the best headline had to have 17 words in it
      because that what tested the best.

      Maybe it did for his specific product.

      It's not that hard online to do a split test to find out what works.

      I am not trying to be a jerk here, but asking the question will
      just get you a lot of opinions from people you don't know and that
      my friend does not pay the bills.

      I was at a restaurant with a client last week and all of
      the prices where rounded up.

      They didn't even have things at $X.50.

      Test it,
      Blase
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    • Profile picture of the author DavidTheMavin
      Originally Posted by dvduval View Post

      So if I am charging $30.00 for my product now, would it help to change the price to $30.95?
      You're kidding right?

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      • Profile picture of the author JohnMcCabe
        At least in the USA, there is definitely a series of psychological price points where you encounter resistance. Even in very large transactions.

        Look through a few real estate listings. You won't find many even dollar prices, regardless how high you go on the scale.

        A $200,000 house will be listed at $199,000. Why? People will tell their agent that their budget is "under $200,000". Even the programming on listing search programs is set up for "under $xxx,xxx". So if the budget is under $200k, a search won't even show the ones for exactly that amount.

        Moving up an order of magnitude, a $2,000,000 house will likely be listed for $1,995,000 for much the same reason. The even numbers present a mental barrier.

        @dvduval - If you're charging $30 now, I wouldn't waste time testing $30.95. I'd be more inclined to test $29.95, $34.95 and $39.95. The sweet spot appears to be just under the next price point.
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    • Profile picture of the author Ken Strong
      Originally Posted by dvduval View Post

      So if I am charging $30.00 for my product now, would it help to change the price to $30.95?
      Change it to 95 cents and see if your conversions go up.
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    • Profile picture of the author FreelanceSally
      Originally Posted by dvduval View Post

      So if I am charging $30.00 for my product now, would it help to change the price to $30.95?
      Ha! No, Smartie-pants. You'd price your product at $29.95
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      My name's not Sally.

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    • Profile picture of the author Wayne A
      Originally Posted by dvduval View Post

      So if I am charging $30.00 for my product now, would it help to change the price to $30.95?
      Think $29.97 or $29.95 sounds better or $29.99? Its weird because when I hear those #'s I think 30 bucks. $30 doesn't sound as good as the others, its all in our minds.
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  • Profile picture of the author dvduval
    I guess it certainly works for gasoline where that 9/10s of a cent every gallon pumped. Maybe it depends on the type of product being sold.
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    It is okay to contact me! I have been developing software since 1999, creating many popular products like phpLD.
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  • Profile picture of the author ForeverMoore
    I have affiliated with a handful of products in a handful of niches. 7 has been known, according to people in these industries, to convert better than any other ending number.

    As has already been mentioned in this thread, testing is key. However, this appears to be an industry standard practice, especially with information products.

    That's my wooden nickel.
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    • Profile picture of the author Blase
      I am just curious does anybody have
      any hard data to prove any of this?

      Any test data what so ever?

      I would imagine some of you know Zig Ziggler.

      He told a story about a family that was preparing
      for Easter dinner, so before they were putting the
      ham into the oven they cut off part of the end of
      the ham.

      Then someone asked why do we cut the end off?

      Someone said I have no idea , but grandma is here let's
      ask her if she knows.


      They asked grandma and she said I have no idea why you do
      it, but I did it because I had a small roasting pan and it never
      fit!
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  • Profile picture of the author Bald Brit
    When it comes to your prospect taking that all important leap
    of faith (pressing your BUY NOW button), their relationship with
    you as a marketer shifts.

    Price perception is deeply rooted in the reasons for your prospect
    taking their step toward you and because of this, price can and
    does sway people's decision to buy.

    Why? Because perception is closely linked to people's concepts
    of informational value, and to their concepts of value for money.

    Perception connects deeply in our minds to that thorniest of beasts:
    emotion, and it's through emotion that many buying decisions are
    made, decisions that are then justified with cold, hard, calculating
    logic.
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  • Profile picture of the author Yudha Andika
    This is psychological marketing technique mate....you can see that 1.97 cheaper than 2.00....try to this following price, .97 or .99...its work well at some product. Good luck
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  • Profile picture of the author ExceedStandard
    psychological definately.... you oughta test it yourself and try .97 against something else like .95 or .99
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  • Profile picture of the author Shakul
    Results have shown that a product having 7 in last sells easily...
    Like $97 sells easier than $99 product and so on...
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  • Profile picture of the author jim01223
    It is nothing but a simple pricing strategy which we not only see in the internet but also in real market.
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    • Profile picture of the author dustinlemos
      It's the idea of "cost threshold." There are common thresholds in pricing that will realize a significant drop in conversions. For example, $100 is a common price threshold. $130 is another. The idea is to get as close to the threshold as possible without crossing it (which is why $99.97 is so common). Once you cross a threshold, you might as well move all the way up to the next one ($129.97), as conversions generally change very little between thresholds.

      Wow I said threshold a bunch of times in there.
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  • Profile picture of the author Desmond Ong
    I took psychology class last semester and learned something about this.

    Apparently, women tend to see $1.97 as $2 and men tend to see $1.97 as $1.
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    • Profile picture of the author p2y
      Originally Posted by Desmond Ong View Post

      I took psychology class last semester and learned something about this.

      Apparently, women tend to see $1.97 as $2 and men tend to see $1.97 as $1.
      Well that would make sense on why to my niches marketed to men seem to have a better conversion rate than my niches for women (I always charge $xx.97)
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    • Profile picture of the author Blase
      Originally Posted by Desmond Ong View Post

      I took psychology class last semester and learned something about this.

      Apparently, women tend to see $1.97 as $2 and men tend to see $1.97 as $1.
      Wait a minute, As a guy I know I am not as smart as a woman,
      (just ask my wife ) but I know that $1.97 is closer to $2.00
      than $1.00!
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  • Profile picture of the author petevamp
    just think about it why does say walmart make a certain item 495 and not just make it 5 people think they are getting a deal and it will average up to 500 with tax even though its more like 527 depending on sales tax
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  • Profile picture of the author Alminc
    Why not try $0.98 ?
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    No links :)
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    • Profile picture of the author Sandor Verebi
      Great approaches above.

      Consumer god's pricing is based on psychology for several hundred years. And naturally if something is well-tried then it is advisable to follow. The application of the old method worked well on the internet, too.

      What do we talk about?

      If you see in the hypermarket the price of 99 cents - what feeling do you have? You feel that it is cheaper than a price mark of $1.00, isn't it? And people like to pay less, including me. My wife says that it is under $1.0 so she'll buy it and turn away from the rounded $1.0 priced product.

      According to a market research of Eric Mitchell, it makes more sense to sell a product end priced of $0,99 than $0,95. Why you leave 4 cents on the table, if the customers' reaction is same for booth numbers? Does he not have truth? Sure.

      In the product range of $10 to $100 you can see variable prices ended of .95 or .75. If you see a price ended of .99 somewhere then you may feel that the seller is a bit greedy. When you go to a restaurant, the chefs' offer is priced at $14.95 and not $14.99.

      What's going on the next price range above $100? You can experience that you see a round sum generally. Why? Because the price of $197 is more acceptable than the 'strange' $196.95. At least from the customers' viewpoint.

      And you know customer is the first!

      My 0.02.

      Sandor
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  • Profile picture of the author Devan Koshal
    7 is a trigger number.
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  • Profile picture of the author ken_p
    what i think about this is that it makes people think that its cheaper if the prices are in odd, as compared to even prices. because I think people think /count in even numbers, and if its a few cent less, then it is definitely cheaper.
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  • As buyers we always have to convince ourselves before making a purchase... and it is a little bit easier it the amount looks less... even tho it really isnt...
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  • Profile picture of the author Aaron Elliott
    but its so old! come on just make it $2, or $50 not $47! arhhhh!
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  • Profile picture of the author Paul Hancox
    I guess it depends on your market. I have seen the scientific studies that demonstrated that, in a supermarket setting, people purchased more of products when they were priced at, say $1.99 instead of $2.00 - by quite a bigger margin than the small price difference.

    This is because $1.99 (and I suppose the same would be true of $1.97) is seen as more significantly lower than $2 than it is, because the first thing we see in the price is the 1, rather than the 2.

    However, since most of us here are not selling in supermarkets, we need to test our prices. A lot of competitive markets online (such as web hosting) still use this kind of x.99 pricing structure, because they need to emphasize the lower cost. x.99 contributes to that perception simply by its constant use in low price appeals. (Again, studies have been done on this.)

    On the other hand, if you're selling high quality, exclusive products, you might want to avoid that.
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    • Profile picture of the author Zacman
      When selling to other online marketers it is best not to use cents at all IMO.

      Nice clear figures like $7 $10 or even $25 bucks seems to convert better and gives the impression you are not trying to entice them into the purchase even if it is subconsciously.

      Just my $0.97 worth of advice.

      Cheers,
      Zac
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      • Profile picture of the author JohnMcCabe
        Naked, unsolicited plug warning...

        If you have questions or problems about pricing, grab Paul's WSO, Pricing for Big Profits.

        It might not answer all your questions, but it will give you a helluva good framework to hang them on while you test for the answers...
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  • Profile picture of the author OmarNegron
    psychological all the way!!!
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