Prices Ending in 7

by aceriker 44 replies
For as long as I can remember, prices in the IM arena have ended in '7' $7, $17, $27, $47, $67, $97 etc. because apparently there is something about '7' that converts better.

Now I'm trying to convince my company that our software products should reflect this pricing structure, but their question is: why?

I've searched for some solid evidence of people saying why prices end in 7 convert better, but turned up short. Our website and product is such that it's pretty difficult to track changes in price to changes in sales.

Do you subscribe to this 7 theory? Have you tested it and found noticable results?
#main internet marketing discussion forum #ending #prices #seven dollar
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  • Profile picture of the author Jelasco
    What is your role in the company? Unless you are upper management, if they want to ignore your suggestions, let them. That's what most companies do with employee suggestions, at least here in the US.

    They can pay a consultant $100,000 to tell them to use prices ending in 7.
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    • I believe ASDA in the UK go by this theory. Not sure if Wal*Mart do. Can't say I've seen a difference myself.
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      • Profile picture of the author Lance K
        I saw test results a number of years ago that said the best number to end with for online sales was 7 and the worst was 3. Of course not only was that a long time ago, but it was before everyone started doing it.

        Another thing you don't see as much any more is prices with decimals (i.e. $19.97). Used to be that it was common for anything under $100 to have decimals used in the price. Seems it's been dropped in favor of the whole dollars ending in 7 method.

        As usual, you have to test. Even if everyone else is doing it, you have no idea of telling whether or not it is right for you if you don't measure results.
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        • Profile picture of the author Jason Fladlien
          Here is the rationale:

          A long time ago, it was better to end with 9 instead of 0. Why? What looks better, $29 or $30? Psychologically, $29 looks a LOT better, and when tested, usually increased sales dramatically.

          However, people soon become immune to this "9" tactic, and it lost it's power. So 7 became the "new 9", and because of it's novelty and inherent association with luckiness (more people choose 7 as their favorite number than any other), it soon started doing better than 9. However, it's been a long time since this has been tested.

          I think people do 7 now just because everyone else does. That's why I do it, lol.

          -Jason
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          • Profile picture of the author Lance K
            Originally Posted by Jason Fladlien View Post


            I think people do 7 now just because everyone else does. That's why I do it, lol.
            That does it. I'm off to test $92.61 vs $97.
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            • Profile picture of the author mdunn123
              My first and currently the only product of my very own is priced at $97. Just the other I had a discussion regarding this topic with a fellow Warrior here and we got into testing pricing points. I'll have to remember to come back here and share the results with everyone. I think it might be kinda interesting actually.
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              • Profile picture of the author Shannon Herod
                I have never personally tested the structure of ending with a seven, but have just trusted those that have tested it

                I do however test different price points, but usually they all end in seven.

                Now, I think I heard that the original theory of seven came about because of the reference to seven in the Bible, but do not quote me on that.
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                • Profile picture of the author Droopy Dawg
                  Got this from "Get Google Ads Free" ebook... this is one man's opinion... but he tries to make sense of it:

                  QUESTION:
                  Why set or round up to even amounts ending in the number 7?

                  ANSWER:
                  Well first off, no one likes loose change; so never sell at any price that adds frustration to someone trying to balance their checkbook (they may see this ahead of time and just decide it’s easier not to buy). Secondly (and this may shock and even surprise you!) but a lot of psychological study went into price theory and price perception, and the number 7 is thought of as "less threatening as any other number." Make all your prices end in 7s.

                  An actual calculation:
                  If you sell off all 10 spots at your upper limit of $237, you make a gross monthly revenue of $2,370; and if at your lower limit of $197 you make $1,970; and if at your average of both lower- and upper-limits (i.e., $217), you’d make $2,170 for the month.
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                  • Profile picture of the author Chris Monty
                    I always end things with 7's. It's a lucky number and a 'happy' number.
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  • Profile picture of the author QuantumSuccess
    If I remember this correctly, it was Mike Enlow who brought up this subject 8 or 9 years ago. After that almost everyone made their sales price end with '7.'

    From my experience it still works with mid to high end products. But with lower end products it doesn't make any difference at all. For instance $29.97 doesn't convert better than $29.95.

    Let's not forget that retail giants like Wal Mart, etc. never used the ending "7" but still use prices like 19.99, 14.95, etc. And since they do intense research and testing on those things, I think they would have used the number 7, if it would have any significant impact on their sales.

    Hope this helps.

    Peter
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    • Profile picture of the author NewBeing
      I find this subject quiet interesting...

      I believe that prices that sell have nothing to do with ending in a 5, 7 or 9!

      It's to do with what we are comfortable with...

      And that's prices which we see the most!

      My advice is, if you want to sell a product at say around the $40 mark, go to Amazon and see what's the most common price around the $40 mark is...

      Say it's $39.95, then sell your product for that amount, because that's the price we see more often and thus we are most comfortable with.
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      • Profile picture of the author JayXtreme
        Read the psyrchology based reply above...

        That is the only answer to this question.. it has been tested and proven over something like 50 testings of various demographics of people

        Jay
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  • Profile picture of the author Andy Fletcher
    As far as I can tell someone "proved" this based on some kind of urban voodoo. Unfortunately people were stupid enough to believe the statistically irrelevent results that it showed. Thus everyone "knew" it to be true and so now no one can sell a serious IM product without it ending in a 7.

    Think about it. The first few IM lessons you learn are "The money is in the list", "Your reputation is everything" and "End prices in a 7". You have no list. You have no reputation. But you sure as hell can create some stupid ebook priced $27. Since you know this to be true, would you trust any Internet "expert" that didn't sell his/her product for a price ending in a 7?

    No, probably not. And thus the cycle continues.

    PS: For anyone who doesn't get it. Ask yourself why your last coke didn't cost you 97c.
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    • Profile picture of the author Jelasco
      Major retailers don't follow this rule. They used to end many prices with 9 or 5, such as 7.99 or 9.95.

      Now they are all over the map. Here are some prices for random products from Walmart's website: 29.86, 135.88, 24.66, 97.41, 39.26, 179.22

      The only pattern I see there is no whole dollar amounts, except for the many prescription drugs that are $4.

      I didn't notice any prices ending in 7 but quite a few with 6 or 8.

      I suspect they have a pricing formula that takes into account the suggested retail price, their cost, their competitors' prices for that item, and other factors. Or maybe humans make them up, but they have too many items for one person to do it all.
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      • Profile picture of the author Allen Graves
        I have a product that has been for sale for $7 for a long time. I recently upped the price to an even $10 and it is selling a lot more than when it was $7.

        This could be because $10 is still a pretty low price, or perhaps the perceived value went up???

        There are a lot of variables and I think the price level (cheap, middle, expensive) may make a difference.

        AL
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        • Profile picture of the author Waseem
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        • Profile picture of the author calvin69
          Try this...

          ... Walk up to a group of people (at a bar perhaps) and ask them to write down a number from 1 to 9... most say 7.

          Interestingly, when I ask them to write down a number from 1 to 10, only half say 7.

          Try it. It freaks 'em out... especially if they've been drinking.
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          • Profile picture of the author Andy Fletcher
            An even better patter for this -

            Think of a number.

            Think of a two digit number.

            Think of a two digit number where both numbers are odd.

            Think of a two digit number where both numbers are odd and the digits are different.

            Most people will say 37.
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            • Profile picture of the author Waseem
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              • Profile picture of the author Andy Fletcher
                Think of a two digit number where both numbers are odd and the digits are different.

                Originally Posted by Waseem View Post

                i got 99
                Try again.
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                • Profile picture of the author macchiavelli
                  I think its all in the mind.

                  When you see something thats $40 im like, damn I have to pay $40.
                  But when you see $37 your like, A its just a little over $30 bucks

                  I dont know...thats how it works on me.
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                  • Profile picture of the author Allen Graves
                    But you also have to remember that if you sell 100 products or memberships a month, you could be leaving $300 on the table.

                    Worse yet, what if you sold 1000 a month? And as time goes by, the membership directories (that make it) could be leaving a ton of money out there just because they decided to charge $27 instead of $30.

                    AL
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                    Every day I check the obituaries. If I don't see my name there, then I know it's going to be a good day!
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                  • Profile picture of the author Jelasco
                    Originally Posted by macchiavelli View Post

                    I think its all in the mind.

                    When you see something thats $40 im like, damn I have to pay $40.
                    But when you see $37 your like, A its just a little over $30 bucks

                    I dont know...thats how it works on me.
                    But then wouldn't $38 or $39 have the same effect?
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                    • Profile picture of the author Brian Tayler
                      So no one here has done a split a/b test on $x7 and $x9? I find that surprising...

                      (me personally.. I'm not "in charge" of pricing... but our products range from $x0 endings to $x7.97 endings... however higher priced products rarely end in 7... usually $xx9 or $xx0).
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                      • Profile picture of the author Frank Donovan
                        Originally Posted by Brian Tayler View Post

                        So no one here has done a split a/b test on and ? I find that surprising...

                        (me personally.. I'm not "in charge" of pricing... but our products range from endings to .97 endings... however higher priced products rarely end in 7... usually or ).
                        I tested this in my eBay shop last year. I priced 50 items at £4.97 and 50 similar items at £4.99 (they weren't exactly the same items, so it wasn't a totally scientific test).

                        The £4.99 items outsold the £4.97 by around 20% over a six week period, so I just changed them back up.

                        However, I found that more expensive items sold slightly better at, say, £37 (whole price - no pence) than £39 or £39.99.

                        NB These were all on "Buy It Now" format.

                        Overall though, even when customers claim not to be affected by the .99 prices, it does still have a psychological impact.

                        Large retailers used to argue that their prices had to end in .99 or .95 in order to force the sales assistant to open the till to get the change (rather than being tempted to pocket the £10/£20 note).

                        Of course, now that most transactions are by plastic, this argument is less credible.

                        Frank
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                      • Profile picture of the author Alan Petersen
                        The OP asked for stats. He knows the perceived value but we all use 7 in a herd mentality. Cracks me up (myself included). I just figured it was is done thus my ebook is sold for $27. I do sell a report for $10 and it does very well vs $7 and $9.95 which I did do a small test on. Nothing scientific.

                        I did try and google for proof and I actually found a study that says of numbers between 1 and 100, 77 had the worse perceived value!

                        In another study, the perceived value of all the numbers between 1 and 100 were studied, and 77 was shown to have the lowest perceived value relative to its actual value.
                        Source - Marketing Research: Psychological pricing., significant digits, scanner data

                        It appears retail studies have done that shows that "odd pricing" converts better sales. Odd pricing refers to a price ending in 1,3,5,7,9 just under a round number (e.g., $0.79, $2.97, $34.95). So in that theory any odd pricing structure should work not just ending in 7. But again only testing can prove that.

                        Google Odd pricing and psychological pricing and you should be able to get some pretty good data to back up your pricing suggestions to your bosses.

                        It doesn't appear 7 is the key it's using an odd number like 7.
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    • Profile picture of the author Kyle Tully
      Originally Posted by Andy Fletcher View Post

      As far as I can tell someone "proved" this based on some kind of urban voodoo.
      Actually it came from a Ted Nicholas seminar back in the early 80s. He tested it and shared his results. Gary Halbert has also talked about it and credited it to Nicholas.

      Still, it's closing in on 30 years since those tests. I've seen new tests that show very different results.
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      • Profile picture of the author Alan Petersen
        Originally Posted by Kyle Tully View Post

        Actually it came from a Ted Nicholas seminar back in the early 80s. He tested it and shared his results. Gary Halbert has also talked about it and credited it to Nicholas.

        Still, it's closing in on 30 years since those tests. I've seen new tests that show very different results.
        It comes from the retailers going back a lot further than the 1980's not Ted Nichols. Perhaps he adopted it to the direct response industry. But if guys like Gary Halpert used it-you know they did test. At least 20-30 years ago.
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        • Profile picture of the author Lance K
          Originally Posted by Alan Petersen View Post

          It comes from the retailers going back a lot further than the 1980's not Ted Nichols. Perhaps he adopted it to the direct response industry. But if guys like Gary Halpert used it-you know they did test. At least 20-30 years ago.
          Someone else's successful test is a fine starting point for your own test, but shouldn't be taken as gospel.
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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 jhongren
            Hi, In addition to the "7", "9" is another number which we can play around with.

            Why not, 9.97 or 49.97?

            Cheers,
            John
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            • Profile picture of the author AndrewCavanagh
              The whole "have a price ending in 7" seems to originate with a recommendation from brilliant copywriter and information marketer Ted Nicholas who found he got a better response this way in offline promotions.

              As far as I know it has never been split tested online.

              The best response rates I've had for copy ended in 9.99 so I doubt there is any validity to ending your prices in 7 at all.

              In fact I'm betting you're just leaving money on the table.

              If you sell a product at 27 instead of 29 dollars and the response rate is the same for both prices you've just blown $2 a product clear net profit.

              If you sell 10,000 products you just threw away $20,000 by following this nonsense "rule".

              Fortunately this IS something you can split test fairly easily online.

              Kindest regards,
              Andrew Cavanagh
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              • Profile picture of the author Rob Canyon
                I always cringe when I hear people trying to convince others of something.

                Are they asking for your advice or are you setting yourself up for a fall by saying that conversions will be better based upon a price point it sounds like hasn't been tested.

                If you've created the product based upon some kind of input from the sales department then that's who should be suggesting pricing.

                Good Luck.

                Cheers,

                Rob
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                • Profile picture of the author Kyle Tully
                  Originally Posted by aceriker View Post

                  Now I'm trying to convince my company that our software products should reflect this pricing structure, but their question is: why?

                  I've searched for some solid evidence of people saying why prices end in 7 convert better, but turned up short.
                  Originally Posted by Rob Canyon View Post

                  I always cringe when I hear people trying to convince others of something.
                  My thoughts exactly.

                  Why are you trying to convince someone of something you have no knowledge of?
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                  • Profile picture of the author Andy Fletcher
                    This link showed up in my RSS reader while I was reading this thread so I thought I'd share it -

                    9s vs 0s in Pricing: Value vs Quality

                    I'm not affiliated with this guy in anyway etc.
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                    • Profile picture of the author SimonHodgkinson
                      I believe as some posters have suggested the use of the magic number 7 comes from Ted Nicholas who to my knowledge spent over a $Million of his own cash testing it out in direct response campaigns.

                      He also once told me what the second best combination he found was and that works well too especially in 'lower end' products (yes sometimes outpulling the 7)

                      Now it's 'over' use in IM is also likely to contribute to it's success -because people already expect to pay 7,17,27,37,47,67,97,147,197,297,997 etc for products. Maybe when the price is different (ie no 7) the spell is broken

                      You said "Now I'm trying to convince my company that our software products should reflect this pricing structure, but their question is: why?"

                      and that's a good question...

                      While it's a good idea to take inspiration from someone else's successful results (and even use them as a starting point) nothing beats your own testing.

                      The proof is in the pudding.

                      What you should seek to convince them on is the importance of testing. I'd guarantee that they're losing money if they're not doing that.

                      "Our website and product is such that it's pretty difficult to track changes in price to changes in sales." How So?


                      Simon
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                      • Profile picture of the author aceriker
                        Wow! What an incredible response. Seems like we've all been using this 7 theory with no real idea as to why Based on hearsay and "because they are doing it" we have all been using the same prices, and conditioning ourselves to expect these prices in the IM arena. But does it translate outside the arena?

                        In a response to a few questions:

                        I'm heading up the online marketing of our products and services and would say I'm pretty senior, there are two people above me, my boss and the ceo. When I say convince, I'm talking about these two people. I have a big say in the pricing, naming, creation and of course the promotion of the products.

                        Simon, appreciate you taking the time to reply. When I say it's pretty difficult to test and track, for starters my predecessor left the site setup in a mess, secondly, sales are sporadic to say the least, one month might be $30,000, the next month might be $55,000, with no apparent increase/decrease in traffic and traffic sources. Conversion rates change month by month and there is no consistancy anywhere - except the traffic.

                        Again, appreciate everyone's input on this price issue, I think I might go back and tell them that $399.95 is a great price


                        Peter
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                        • Profile picture of the author SimonHodgkinson
                          Hi Peter

                          Take a look at www.google.com/websiteoptimizer - it might be worth running some simple tests using this tool (it's free and fairly straightforward to use) - There's also quite a lot of useful info under "Testing 101"

                          There are a lot of factors to consider and because we have many unknown 'variables' that really can't be discussed in a public forum it's hard to guess what is causing those fluctuations (things like your product price point/market sector/customer purchase patterns/sales histories etc)

                          But in general... if both traffic source and traffic volume are consistent but the sales volume is up and down like that it really would be worth spending time, effort (and possibly cash) to find out why

                          If you think about it, whatever those 'issues' are they're costing the company $25K in certain months. Stopping the leaks by testing and tweaking to improve conversions and create consistent results would be very worthwhile.

                          Good Luck With It

                          Simon
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                          • Profile picture of the author AndrzejR
                            I need for my composition more researches, real examples, statistics and sales' charts, which gives proof of magic of prices ending in "7", please!
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  • Profile picture of the author imb
    I wonder if odd pricing also work in service quotations, like in web development deals. Usually price quotes are in a whole number like: $1000, $2000, etc. I've had experience in bidding sites where in the winning bidder defeated me by using odd pricing. For example I bid $1000, he bids $998. Take note though that skills, reputation are also considered by the buyers and he appeared to have less ratings than I do. There where also other bidders who bid lower than his bid (ie: $500) so it's not always the lowest bidder who wins.
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  • Profile picture of the author sonicadam123
    I've always found psychology very interesting, i remember learning about the psychology behind why retailers would price things at £19.99 as opposed to £20.00(for example) back in school, think I was like 10 years old - and that probably is part of the reason why that pricing doesn't work so well anymore.

    Some retailers in the UK I have noticed pricing their price point changing to .97, although I know for currys/pcworld/dixons .97 indicates an end of line product.

    One food retailer, Iceland has reverted to what they call "round pound value" as everythings rounded up to the nearest £ - although it would be interesting to know how this has effected sales, or if it has at all.

    Still very interesting
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  • Profile picture of the author GeorgiaB
    Some people said the tests reveals that best number to end with for online sales was 7. A long time ago, it was better to end with 9.

    I have never personally tested the structure of ending with a 7. Personally, I use both, prices that ends with 7 and prices that ends with other figures.
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  • Profile picture of the author vndnbrgj
    It's a fact that the average price of a good selling WSO is $17...
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  • Profile picture of the author Ben Gordon
    There are thousands of reasons why marketers choose the number 7.

    1. It is considered a really good number, some even call it god's number.

    2. When a product is $49 people are already used to thinking its $50, but when it's $47 because of the slight change, it's not so close to 50, therefore leaving them thinking 40.

    Again, there are more reasons, these are just some that came into my mind right now .
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  • Profile picture of the author alcymart
    I'll guess number 7 is the favorite number of most people consciously or unconsciously I know this could turn into a debate, Without having done the research and for what its worth, take it as a wild guess for now...

    I know it to be my favorite numberthus my comment...lol

    Bernard
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  • Profile picture of the author celente
    I could go into a theory, but seen on on a blog how we take money and add value and are always after a bargain. I just cracked that down to two lines.

    However I have always used 7's and 9's in my prices. Even in my WSO I am running at the moment. They always seem to work better.

    Cheers.
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