Featured Research

from universities, journals, and other organizations

Penny Pinching: How Consumers React To Prices Ending In 99

Date:
June 7, 2005
Source:
University of Chicago Press Journals
Summary:
Have you ever wondered why prices do not often end in simple round numbers? Decades of research have focused on the issue of pricing and a new study published in the June 2005 issue of the Journal of Consumer Research analyzes how consumers perceive the difference between prices ending in .00 or .99. This study which focuses on the left digit, rather than cents, finds that the difference can be important to consumers.

Have you ever wondered why prices do not often end in simple round numbers? Decades of research have focused on the issue of pricing and a new study published in the June 2005 issue of the Journal of Consumer Research analyzes how consumers perceive the difference between prices ending in .00 or .99. This study which focuses on the left digit, rather than cents, finds that the difference can be important to consumers.

"We show that nine ending prices may sometimes but not always be perceived to be lower than a price one cent higher. This perception is more likely to occur when introducing a nine ending in the price causes a change in the left-most digit. Further, this perception is more likely when the nine ending price is perceived to be close to the comparison standard price," conclude Manoj Thomas and Vicki Morwitz (New York University).

Their study focuses on the left digit effect. This effect refers to the change in price that occurs when reduced by one cent from, for example, $3.00 to $2.99--the far left digit changes from three to two. Traditionally, explain the researchers, it was assumed that the nominal difference was inconsequential. However, this study reveals that the minor difference has the potential to have major effects.

"This research adds further evidence to the view echoed by previous researchers that the decision whether or not to use nine ending prices is an important one and deserves due attention," they explain. "Importantly, we show that nine ending prices may sometimes but not always be perceived to be lower than a price one cent higher. This perception is more likely to occur when introducing a nine ending in the price causes a change in the left-most digit. Further, this perception is more likely when the nine ending price is perceived to be close to the comparison standard price."

###

Penny Wise and Pound Foolish: The Left Digit Effect in Price Cognition. Manoj Thomas and Vicki Morwitz. Journal of Consumer Research. June 2005.


Story Source:

The above story is based on materials provided by University of Chicago Press Journals. Note: Materials may be edited for content and length.


Cite This Page:

University of Chicago Press Journals. "Penny Pinching: How Consumers React To Prices Ending In 99." ScienceDaily. ScienceDaily, 7 June 2005. <www.sciencedaily.com/releases/2005/06/050607030351.htm>.
University of Chicago Press Journals. (2005, June 7). Penny Pinching: How Consumers React To Prices Ending In 99. ScienceDaily. Retrieved September 1, 2014 from www.sciencedaily.com/releases/2005/06/050607030351.htm
University of Chicago Press Journals. "Penny Pinching: How Consumers React To Prices Ending In 99." ScienceDaily. www.sciencedaily.com/releases/2005/06/050607030351.htm (accessed September 1, 2014).

Share This




More Mind & Brain News

Monday, September 1, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Coffee Then Napping: The (New) Key To Alertness

Coffee Then Napping: The (New) Key To Alertness

Newsy (Aug. 30, 2014) Researchers say having a cup of coffee then taking a nap is more effective than a nap or coffee alone. Video provided by Newsy
Powered by NewsLook.com
Young Entrepreneurs Get $100,000, If They Quit School

Young Entrepreneurs Get $100,000, If They Quit School

AFP (Aug. 29, 2014) Twenty college-age students are getting 100,000 dollars from a Silicon Valley leader and a chance to live in San Francisco in order to work on the start-up project of their dreams, but they have to quit school first. Duration: 02:20 Video provided by AFP
Powered by NewsLook.com
Baby Babbling Might Lead To Faster Language Development

Baby Babbling Might Lead To Faster Language Development

Newsy (Aug. 29, 2014) A new study suggests babies develop language skills more quickly if their parents imitate the babies' sounds and expressions and talk to them often. Video provided by Newsy
Powered by NewsLook.com
Electrical Stimulation Boosts Brain Function, Study Says

Electrical Stimulation Boosts Brain Function, Study Says

Newsy (Aug. 29, 2014) Researchers found an improvement in memory and learning function in subjects who received electric pulses to their brains. Video provided by Newsy
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins