Price psychology in Internet Marketing

by cup243
35 replies
I am curious, why prices in IM usually end with the number 7?
$27, $47, $97... etc.
#internet #marketing #price #psychology
  • Profile picture of the author clever7
    Because 7 is a very sympathetic number.

    After testing many times, experts concluded that the number 7 is the ideal one because it converts better than any other number. This is why all prices online end on 7.

    I don't know if this rule should be respected exactly because all these prices ending on 7 give a bad impression to all online users.

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  • Profile picture of the author writeaway
    It gives the impression that the buyer is not paying too much. Online, the very common offline trick of 99.99 isn't going to cut it. So many marketers focus on a lower price point to hit the same basic psychological spot.
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    • Profile picture of the author WillR
      Originally Posted by writeaway View Post

      It gives the impression that the buyer is not paying too much. Online, the very common offline trick of 99.99 isn't going to cut it. So many marketers focus on a lower price point to hit the same basic psychological spot.
      Well using the number 6 would give them the impression they are paying even less also. It's not just because of that. It's because a few marketers said it is the best number and so everyone just uses it without even thinking.
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      • Profile picture of the author Gary Ning Lo
        Originally Posted by WillR View Post

        Well using the number 6 would give them the impression they are paying even less also. It's not just because of that. It's because a few marketers said it is the best number and so everyone just uses it without even thinking.
        I also believe above is true.. You can't really know if something works if you don't test it. And concerning product prices, most of us don't. We just use what's popular.

        Cheers,

        Gary
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  • Profile picture of the author WillR
    Because a lot of people in this industry are sheep and like to follow what they see others doing.

    The reality is unless you have tested the number yourself then assuming it works best with your own market is only going to cost you sales. Everything like this should be tested yourself regardless of what 'studies' others have done. They don't mean a whole lot to your own situation since there are exceptions to every rule.

    A lot of the times if you do the opposite to what everyone else is doing it can work even better. So test, test, test.
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    • Profile picture of the author igrowyourbiz
      Originally Posted by WillR View Post

      Because a lot of people in this industry are sheep and like to follow what they see others doing.

      The reality is unless you have tested the number yourself then assuming it works best with your own market is only going to cost you sales. Everything like this should be tested yourself regardless of what 'studies' others have done. They don't mean a whole lot to your own situation since there are exceptions to every rule.

      A lot of the times if you do the opposite to what everyone else is doing it can work even better. So test, test, test.

      yeah -- what he said...

      lol - if you look at the time stamps will, we were typing the same thing at the same time :p
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  • Profile picture of the author igrowyourbiz
    mostly american superstition combined with sticker shock avoidance.

    in america 7 is considered a lucky number

    in addition as mentioned above, it is the same principle as saying it is 99.99 (because it keeps it to 2 digits before the decimal rather than 3)

    We read from left to right, the "7" keeps it from crossing the line to the next higher number.

    97 APPEARS to be less than $100 when in reality it is not that much difference. Same with 7 vs 10, 997 vs 1000 etc.

    It mostly has "stuck" from early internet days since most people merely copy or guess at pricing.

    If you do split testing, you might actually find ROUND numbers like a solid 100 works better or the ending considered more traditional ending in 99. 99 cent reports still do well, and add value to something over free. 2.95 shipping only items, etc. You have to measure against YOUR target audience and see what works best.

    my 2¢
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  • Profile picture of the author JohnDBrewer
    @WillR --> You have mentioned testing in multiple threads before....what do you use to test and how do you test???

    I have heard of A and B testing but the concept has completely left me baffled.

    Thanks,

    John
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    • Profile picture of the author JohnMcCabe
      Originally Posted by igrowyourbiz View Post

      mostly american superstition combined with sticker shock avoidance.

      in america 7 is considered a lucky number

      in addition as mentioned above, it is the same principle as saying it is 99.99 (because it keeps it to 2 digits before the decimal rather than 3)

      We read from left to right, the "7" keeps it from crossing the line to the next higher number.

      97 APPEARS to be less than $100 when in reality it is not that much difference. Same with 7 vs 10, 997 vs 1000 etc.

      It mostly has "stuck" from early internet days since most people merely copy or guess at pricing.

      If you do split testing, you might actually find ROUND numbers like a solid 100 works better or the ending considered more traditional ending in 99. 99 cent reports still do well, and add value to something over free. 2.95 shipping only items, etc. You have to measure against YOUR target audience and see what works best.

      my 2¢
      You're spot on here. The earliest references I can find are from Ted Nicholas, who mentioned one test where a price ended in '7' converted best. Mark Joyner later quoted Nicholas in one of his manuals. The IM version of 'Chinese whispers' has turned that into 'many experts have tested this and proved that prices ending in 7 are better'.

      To use an offline example, I once advised a group that was raising funds for a group outing. They offered a simple service that, when coupled with the reason for the offer, was easy to say yes to. They were afraid of scaring people away, so they priced themselves at $9. After multiple runs for change, one customer came out and asked why they didn't just change the price to $10 so people only needed a $10 bill. Worked like a charm.

      What worked even better was changing the price to "whatever you think the job is worth to you" on the second day. No change needed. Lots of $20 bills in the box at the end of the day. It helped that these were clean-cut teens with a good cause. Paying more was 'worth it' to a lot of people who wanted to support these kids working for what they wanted instead of panhandling in front of a local Walmart or grocery.

      Sometimes the herd is going in the wrong direction...
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  • Profile picture of the author WillR
    I once tried testing $7 versus $1.

    $1 won.

    So this ruins the theory that 7's are the best.
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    • Profile picture of the author Cyberjoe
      Originally Posted by WillR View Post

      I once tried testing $7 versus $1.

      $1 won.

      So this ruins the theory that 7's are the best.
      Who would have expected that outcome?
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    • Profile picture of the author maximus242
      Originally Posted by WillR View Post

      I once tried testing $7 versus $1.

      $1 won.

      So this ruins the theory that 7's are the best.
      No you dont understand the theory. The theory is that given the following choices:

      1. $19.95
      2. $19.97
      3. $20.00

      The price ending in seven will produce higher sales, all other factors being equal. To do a proper test you would have needed to compare:

      1. $0.97
      2. $0.95
      3. $1.00

      The majority of the time, a price ending in 7 will outperform other endings. This was tested on millions of subscribers, multiple times over a very long period of time. It has statistical significance and it is a good case for running the test on your own products, provided you are an avid split tester.

      Nobody knows the reason why this happens, but it does. Its that simple.
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      • Profile picture of the author WillR
        Originally Posted by maximus242 View Post

        No you dont understand the theory. The theory is that given the following choices:

        1. $19.95
        2. $19.97
        3. $20.00

        The price ending in seven will produce higher sales, all other factors being equal. To do a proper test you would have needed to compare:

        1. $0.97
        2. $0.95
        3. $1.00

        The majority of the time, a price ending in 7 will outperform other endings. This was tested on millions of subscribers, multiple times over a very long period of time. It has statistical significance and it is a good case for running the test on your own products, provided you are an avid split tester.

        Nobody knows the reason why this happens, but it does. Its that simple.
        Can you provide me with a link to the study?

        It's all good and well for everyone to say a study was done but what study? Where is the study? How was it conducted? Have you actually seen the study?

        It's kind of like the people who say an email subscriber should be worth $1/month. Says who? A few marketers mentioned those figures years ago and people have taken it as folk law ever since. That's not the correct way to do marketing.

        The reality is it simply will not hold true in all circumstances and that's why the only way to be sure is to test with your own products and your own markets. If you just assume things based on previous studies then you are only well, assuming. An we all know that assumption is the mother of all f*** ups.
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      • Profile picture of the author Greg guitar
        Originally Posted by maximus242 View Post

        No you dont understand the theory. The theory is that given the following choices:

        1. $19.95
        2. $19.97
        3. $20.00

        The price ending in seven will produce higher sales, all other factors being equal. To do a proper test you would have needed to compare:

        1. $0.97
        2. $0.95
        3. $1.00

        The majority of the time, a price ending in 7 will outperform other endings. This was tested on millions of subscribers, multiple times over a very long period of time. It has statistical significance and it is a good case for running the test on your own products, provided you are an avid split tester.

        Nobody knows the reason why this happens, but it does. Its that simple.
        It's a safe bet he did understand the theory, but you didn't get his joke (though he rightly points out that you really should base your own marketing choices on your testing rather than a rumor about how someone else's did).

        I mean, he said he tested $1 against $7 and the $1 winning means the theory about 7 being a good figure was disproved. You don't see any humor in that?
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  • Profile picture of the author clever7
    Yes, I remember Nicholas talking about it in his direct marketing newsletter probably some 25 years ago. He tested $147 against $149, multiple times, and the $147 won. Then, as I recall, he bagan testing other offers with the price ending in 7 or 9, and 7 was the winner.

    :-Don


    So, everyone online is following a test made 25 years ago?

    While the internet keeps changing so much?…

    I’m glad because I didn't follow this rule in my prices now that I have learned its historical background.


    However, I decided my username here at the WF based on this rule. This is why I'm clever 7.








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    • Profile picture of the author igrowyourbiz
      Originally Posted by clever7 View Post



      So, everyone online is following a test made 25 years ago?

      While the internet keeps changing so much?...

      I'm glad because I didn't follow this rule in my prices now that I have learned its historical background.


      However, I decided my username here at the WF based on this rule. This is why I'm clever 7.








      nothing new under the sun, and yes, the vast majority of those doing things online are just following a trend mad a very long time ago.

      the best part is, I was fortunate enough to be in Direct Mail/Mail Order marketing in the 80s...so there is NOTHING ORIGINAL about ANY PART of internet marketing that has not been done already for over 50 years now.

      I love when new techniques come out...because so far, i have not seen ANYTHING new...not even the "video salesletter" which is why in 2006 I said they would take over written sales letters (and registered some good domains as a result!)
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  • Profile picture of the author ronrule
    Price psychology is a weird thing, man. But it's different for every audience. When we do an infomercial the price is always $9.95 or $19.95, but on the web I get better results at $9 or $11 than $9.95 or $10.

    I still don't know why gas stations don't just round off that third digit either.
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  • Profile picture of the author goindeep
    Originally Posted by cup243 View Post

    I am curious, why prices in IM usually end with the number 7?
    $27, $47, $97... etc.
    My Mr's look at stuff offline that is sold for $59.95 and she always seems to say "Oh, look honey its only $50..."
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  • Profile picture of the author GforceSage
    $10, $20, or $30 works also if you remember that by always adding more value, you won't necessarily have to reduce the price to the nearest 7 to get action.
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  • Profile picture of the author maximus242
    Its in Dan Kennedys book on Direct Marketing and in Ted Nicholas' Course on Direct Marketing. He also includes it in his copywriting courses, Ted did price testing for several years (hes one of the biggest testers in history) and those were his findings.

    Did you do the split test yourself? Maybe instead of criticizing you should just run the split test and say thanks for increasing your conversions

    Its not a formal academic study, it comes from the direct marketing world, which is based mostly off of A / B split runs.

    I didnt say it holds true 100% of the time, I said more often than not, statistically, it has the highest conversions based on the data. I never said its 100% of the time.
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    • Profile picture of the author WillR
      Originally Posted by maximus242 View Post

      Did you do the split test yourself? Maybe instead of criticizing you should just run the split test and say thanks for increasing your conversions
      You are mistaking disagreeing with criticizing. I don't agree with you -- that's all. I am simply stating that to say everyone should use 7's at the end of their prices is not what I would recommend since it will not hold true all the time.

      Studies conducted years and years ago might be something you take into account but it should always be tested in every market and with every product.

      I have tested this many times with products of my own and found that more times than not, other figures beat those ending in 7's.

      The problem is as soon as everyone else starts doing it (which is what has happened in IM) it starts to become less effective. I think a study done today would produce different results to those studies you are referring to that were done years ago.
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  • Profile picture of the author nrgexplosion
    Psychology evolves over time I think as well.
    When people see $19.95 they used to think,,, oh great deal ... it's basically $20 but those few cents seem to provide great value over 19.99 that was often used before... and then 7 came into play... today you tend to see 7 used by walmart, costco, and internet marketers When I see a price ending in a 7... particularly $47 I tend to roll my eyes. I've never tested it... but one of the products I used to sell was right about $200 even to start, I converted at around 50%... granted it was a niche market (trading education program that I also offered free coaching for). That was probably my most successful run. I'm not sure I buy into the hoopla around the 7's... maybe for low priced items... I'd like to see the study though.
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  • Profile picture of the author maximus242
    Cool thanks for the info, good to know.
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  • Profile picture of the author clever7
    I believe that the psychological effect caused by the number 7 compared to numbers ending in 5 and 0 is the effect of a logical solution, because it is in the middle.

    I read an email message about a company that wanted to promote a product that was expensive (product number 1), with another one that was inexpensive (product 2) and everybody was buying only the inexpensive and thinking that the other one was too expensive.

    So, they created product number 3, which was more expensive than product 1 without having the intention to sell product 3 because it was too expensive, and then they finally managed to sell product 1, because it was neither the most expensive, nor the cheapest one. They changed its position.


    This doesn’t mean that you have to use only 7 in your prices. You can also use other numbers. What matters is to convince your prospects that this is a logical solution. This is a reasonable price for some reason.










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  • Profile picture of the author maximus242
    Go back to your guitar greg.
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    • Profile picture of the author Greg guitar
      Originally Posted by maximus242 View Post

      Go back to your guitar greg.
      Well it was a pretty obvious joke. Just pointing it out; no need to get testy.
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  • Profile picture of the author CandyxLand
    It's not that 7 is a lucky number, it's that it makes it sound cheaper. There are certain "price milestones," such as $100, which I'll use in this example. If you price something at $97, in their minds people can think "It's under $100." If you price something at $100.97 people will think "That's more than $100."
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  • Profile picture of the author Mike Murphy
    A discussion as old as time! I wonder if ladys of the night in the old school brothels every considered split testing their prices......

    I think the whole thing is a bit of a laugh. I mean everything else is in place:
    market to message match
    great copy
    great product
    great traffic
    qualified leads

    THEN would the last digit of the price really matter? Doubt it.

    I still say we ask the hookers to split test.....uh, prices that is.
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  • Profile picture of the author TravisO
    I don't have psych skills and I don't think I need one. But really the price ending with number 7 sounds very cheap.
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  • Profile picture of the author RockNRolla
    This is an interesting topic, I've always wondered this too and once read that it was simply a case of the price point ending in 7 converting better than all other tested variations. I can't remember where I read this as it was a long time ago. This must have some truth to it as basically every product/course you see ends in 7. If it didn't convert best people would've moved away from using it by now.
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  • Profile picture of the author CyberAlien
    I've tested with a ton of different numbers and the only ones that seem to be lower in sales are ones that end in 0s. For example, I wouldn't see something for $100 but would for 95, 96, 97, 98, or 99.
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  • Profile picture of the author seobro
    I have found by trial and error... that I do great with 4.99 and 9.99 - with $5.95 as a distant third, but some clowns love seven. I see a lot of WSO selling for $7.77 and that is silly guys. Like it looks so lame, but there you go.

    The best price on amazon is 99 cents and that is over 50% of the books they sell because psychologically you are saying that it is less than a dollar - pocket change gets you an e-book that is super.

    Both $9.99 and $4.99 work the same way. People see a ten spot or a fiver. Witness the growth of the fiverr website which loves the number five and not six or seven.
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  • Profile picture of the author Edwin Torres
    I've wondered this also but it most likely has to do with the positive connotation behind the number 7.

    Like if you go to a casino getting a 777 on the slot machine is the jackpot.

    So I guess subconsciously your brain makes the connection with that and people think this product will be the jackpot and they wanna purchase it.
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