Connect with us

Business Marketing

Why prices ending in 9 sell best: MIT study

Have you ever wondered why prices at retailers usually end in the number 9? It’s not because it’s a sexy number, there is science behind it.

Published

on

pricing with nines

pricing with nines

Why the number nine is so powerful

[ba-pullquote align=”right”]Finding the right price to attach to a product or service is an art.[/ba-pullquote]Pricing your product or services may be one of the most stressful parts of owning a business. You know your service is valuable. You know there is an audience out there that understands that value. But finding the right price to attach to a product or service is an art. If you price something too high, you won’t be as successful. If you price things too low, customers may not think your service is valuable and you won’t be making what you deserve. Finding the perfect balance is important, but it’s also about knowing how customers view prices, especially prices that end in the number nine.

We’ve all seen pricing that ends in the number nine. Take purchasing gasoline, for instance. It always has the same formatting, no matter which gas station you frequent. You’ve seen it in nearly every store you’ve walked into. So, how do you take all of this and apply it to your own pricing? First you must understand the effect that ending a price with a nine can have on your customers or clients.

Experiment: women’s clothing

[ba-pullquote align=”right”]The $39 item sold the best, even better than the cheaper price of $34.[/ba-pullquote]MIT and the University of Chicago conducted an experiment with prices on women’s clothing. They had three basic prices, $34, $39, and $44. Surprisingly, the $39 item sold the best, even better than the cheaper price of $34. However, they did find that sales prices that are listed by the original price can easily beat out a price ending in nine. One reason is the mind sees the first set of numbers and registers it as priced in the 30-dollar range, even when it’s closer to the 40-dollar range. Purchasing an item for $39.99 will seem more of a value than purchasing the same item for $40 even. It’s only different by a penny, but that one penny seemingly takes the price to an entirely lower level, thus increasing the value and the deal.

Customers also sometimes prefer to pay a middle price rather than either end because it can feel as though they’re getting a great deal and it’s better quality than the lowest price. Customers are looking for bargains and value, and that combination can be difficult to come by. And that’s where you and your business come into the picture.

Pricing your own services

[ba-pullquote align=”right”]Be open to change and improvement. Be open to progression.[/ba-pullquote]When pricing your services, consider offering a few price points and end them with a nine for good measure. You may find that your most popular service is the one priced right in the middle. Don’t feel as though you’re trapped once you choose your prices. You can always switch them if they’re not giving you the response you’re looking for. Be open to change and improvement. Be open to progression. That’s when you’ll find success and reach your professional goal.

The American Genius Staff Writer: Charlene Jimenez earned her Master's Degree in Arts and Culture with a Creative Writing concentration from the University of Denver after earning her Bachelor's Degree in English from Brigham Young University in Idaho. Jimenez's column is dedicated to business and technology tips, trends and best practices for entrepreneurs and small business professionals.

Continue Reading
Advertisement
13 Comments

13 Comments

  1. Lane Bailey

    July 6, 2012 at 10:53 am

    The problem with that is real estate search. I find that most consumers search with round numbers… like $100k to $125k. Pricing at $99,999 (or even the popular $99,900) means that the house is missed by a large percentage of consumers. The other thing to keep in mind is that were aren’t talking about a pair of pants, or even a fridge. We are talking about a house. The study specifically focused on a blouse around $40. That is a LOT different than a house that might be several hundred thousand dollars. What do you think?

  2. Mike Schmidt

    July 6, 2012 at 10:56 am

    9 has halways been my number. Born on the twenty-9th, married on 9-9-81 @ 9am. Number nine, Number 9, Number n9ne…

  3. Goodcleanliving

    July 6, 2012 at 11:03 am

    @AgentGenius It doesn’t work in real estate. Cheapens listings and dodges important Boolean search basis. Counter intuitive.

  4. DanielBates

    July 6, 2012 at 1:06 pm

     @Lane Bailey By the same logic that the listing misses the $100-125 range, doesn’t it fall into into the $75-100 range? Wouldn’t a good real estate agent search a larger range for their client anyway? 
     

  5. Lani Rosales

    July 8, 2012 at 8:17 pm

    i was born in 81. do i get a prize?

  6. Mike Schmidt

    July 8, 2012 at 9:38 pm

    You are a prize, but yes.

  7. Lani Rosales

    July 8, 2012 at 11:41 pm

    i sense sarcasm, Schmidty

  8. Mike Schmidt

    July 9, 2012 at 10:26 am

    Never.

  9. Mike Schmidt

    July 9, 2012 at 10:27 am

    And you really are. My days would be less interesting without your posts.

  10. Guyn22wun1

    July 9, 2012 at 1:21 pm

    @DawnaDavies https://t.co/xyjDyodw

  11. Nanette

    July 9, 2015 at 11:19 pm

    $39.99 vs $40.

    More like the businesses think that We, People are stupid and can't do math.

    • Lani Rosales

      July 10, 2015 at 12:04 pm

      Nanette, you're totally right, and since publication of this story, more research has been done that shows that our brains have been rewired to mistrust non-rounded numbers. The major exception is real estate, because of how syndication works (someone thinks they don't want anything $150k or over, so they limit search to under that, making Realtors price homes at $149,999 to be included in said search).

  12. Pingback: The Pricing Power of 9: Does it Work? - PayMotion™

Leave a Reply

Your email address will not be published. Required fields are marked *

Business Marketing

Snapchat’s study reveals our growing reliance on video

(BUSINESS MARKETING) Snapchat released a report that shows some useful insights for future video content creation.

Published

on

Snapchat's video

Snapchat is taking a break from restoring people’s streaks to publish a report on mobile video access; according to Social Media Today, the report holds potentially vital information about how customers use their mobile devices to view content.

And–surprise, surprise–it turns out we’re using our phones to consume a lot more media than we did six years ago.

The obvious takeaways from this study are listed all over the place, and not even necessarily courtesy of Snapchat. People are using their phones substantially more often than they have in the past five years, and with everyone staying home, it’s reasonable to expect more engagement and more overall screen time.

However, there are a couple of insights that stand out from Snapchat’s study.

Firstly, the “Stories” feature that you see just about everywhere now is considered one of the most popular–and, thus, most lucrative–forms of video content. 82 percent of Snapchat users in the study said that they watched at least one Snapchat Story every day, with the majority of stories being under ten minutes.

This is a stark contrast to the 52 percent of those polled who said they watched a TV show each day and the 49 percent who said they consumed some “premium” style of short-form video (e.g., YouTube). You’ll notice that this flies in the face of some schools of thought regarding content creation on larger platforms like YouTube or Instagram.

Equally as important is Snapchat’s “personal” factor, which is the intimate, one-on-one-ish atmosphere cultivated by Snapchat features. Per Snapchat’s report, this is the prime component in helping an engaging video achieve the other two pillars of success: making it relatable and worthy of sharing.

Those three pillars–being personal, relatable, and share-worthy–are the components of any successful “short-form” video, Snapchat says.

Snapchat also reported that of the users polled, the majority claimed Snapchat made them feel more connected to their fellow users than comparable social media sites (e.g., Instagram or Facebook). Perhaps unsurprisingly, the next-closest social media platform vis-a-vis interpersonal connection was TikTok–something for which you can probably see the nexus to Snapchat.

We know phone use is increasing, and we know that distanced forms of social expression were popular even before a pandemic floored the world; however, this report demonstrates a paradigm shift in content creation that you’d have to be nuts not to check out for yourself.

Continue Reading

Business Marketing

Technology is helping small businesses adapt and stay afloat

(BUSINESS MARKETING) Small businesses need to utilize digital platforms to adapt their businesses during COVID-19, or else they may be left behind.

Published

on

small businesses new tech

While many may not have imagined our present day back in March, and to what extreme we would be doing things “remotely” and via “hands-free contact”, we have to give some credit to small business owners who remain flexible and have pivoted to stay afloat. They deserve major credit on adaptations they have made (and possibly investments) in new technology (ordering online, online payments) especially at a time when their in-person revenues have taken a hit.

There are various marketing buzz words being used lately to say “let’s keep our distance”, including: curbside, to-go, hands-free, no contact, delivery only, order via app, social distancing and #wearamask.

The thing is, if you really think about it, small businesses are always in evolution mode – they have to pay attention to consumer consumption and behaviors that can shift quickly in order to stay relevant and utilize their marketing and advertising budgets wisely. They heavily rely on positive customer reviews and word of mouth recommendations because they may not have the budget for large scale efforts.

For example, we use Lyft or Uber vs calling an individual cab owner; we order on Amazon vs shopping at a local mom-and-pop shop; we download and make playlists of music vs going to a record or music store. Small business owners are constantly fighting to keep up with the big guys and have to take into account how their product/service has relevance, and if it’s easy for people to attain. In current times, they’ve had to place major efforts into contactless experiences that often require utilizing a digital platform.

If stores or restaurants didn’t already have an online ordering platform, they had to implement one. Many may have already had a way to order online but once they were forced to close their dining areas, they had to figure out how to collect payments safely upon pickup; this may have required them to implement a new system. Many restaurants also had to restructure pick up and to-go orders, whether it was adding additional signage or reconfiguring their pick up space to make sure people were able to easily practice social distancing.

According to this article from the U.S. Chamber of Commerce, “Studies have shown that 73% of small businesses are not aware of digital resources, such as online payment processing tools, online productivity tools, e-commerce websites, online marketing and other tools, that can help them reach customers around the world. If small businesses had better access to global markets, it could increase the GDP of the United States by $81 billion and add 900,000 new jobs. During the pandemic, this could also mean the difference between thriving and closing for good.”

There are some larger corporate technology companies offering ways to support small businesses whether it’s through small business grants from Google, resources and grants from Facebook or Verizon giving them a break on their telecom bill. The challenge with this may be whether or not small business owners are able to find time from their intense focus on surviving to applying for these grants and managing all that admin time. Many business owners may be focusing on what technology they have and can upgrade, or what they need to implement – most likely while seeing a loss in revenue. So, it can be a tough decision to make new technology investments.

It does seem like many have made incredible strides, and quickly (which is impressive), to still offer their products and services to customers – whether it’s a contactless pay method, free delivery, or even reservations to ensure limited capacity and socially distanced visits. There are still some that just haven’t able to do that yet, and may be looking at other ways to take their business to a wider audience online.

We would encourage, if you can, to support small businesses in your community as often as you can. Understandably there are times that it’s easier to order on Amazon, but if there is a way you can pick up something from a local brewery or family-owned business, this may be the lifeline they need to survive and/or to invest in new technology to help them adapt.

Continue Reading

Business Marketing

There’s a shortage of skilled workers, so get learning

(BUSINESS MARKETING) COVID-19 may end up justifying training funds for lower-class workers to learn new skills. Skilled workers are desperately needed right now.

Published

on

skilled worker

The COVID-19 pandemic (yes, that one) has ushered in a lot of unexpected changes, one of the which is most surprising: An increased call for skilled workers — a call that, unfortunately, requires a massive retraining of the existing workforce.

According to the New York Times, nearly 50 percent of Americans were working from home by May; this was, reportedly, a 15 percent increase in remote work. The problems with this model are expansive, but one of the greatest issues stems from the lack of training: As employees of lower-class employment transitioned to working online, it became increasingly evident that there was a shortage of skilled workers in this country.

The Times traces this phenomenon back to the Great Recession; Harvard University’s Lawrence Katz points to some parallels and insinuates that this is an opportunity to elevate the lower class rather than regressing, and it seems fair to put the onus of such elevation on lawmakers and senators.

Indeed, Congress has even addressed the issue of skill equality via “bipartisan support” of a $4000 credit for non-skilled workers to use toward skill training. For Congress to come together on something like this is relatively noteworthy, and it’s hard to disagree with the premise that, given the invariable automation wave, many of our “non-skilled” workers will face unemployment without substantial aid.

COVID-19 has accelerated many trends and processes that should have taken years to propagate, and this is clearly one of them.

Supporting laborers in developing skills that help them work within the technology bubble isn’t just a good idea–it’s imperative, both morally and economically speaking. Even middle-class “skilled” workers have had trouble keeping up with the sheer amount of automation and technology-based skillsets required to stay competent; when one considers how lower-class employees will be impacted by this wave, the outcome is too dark to entertain.

It should be noted that non-skilled workers don’t necessarily have to scale up their training in their current fields; the Times references a truck driver who pivoted hard into software development, and while it may be easier for some to focus on their existing areas of expertise, the option to make a career change does exist.

If we take nothing else away from the time we’ve spent in quarantine, we should remember that skilled labor is integral to our success as a society, and we have a moral obligation to help those who missed the opportunity to develop such skills fulfill that need.

Continue Reading
Advertisement

Our Great Partners

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Emerging Stories

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!