Does .99 cent pricing really work? Wouldn’t it be easier to round everything to the nearest dollar?
The answer to both those questions is a resounding “yes.” Although it would be easier to round up, stores use so-called psychological pricing because it demonstrably boosts sales by 8%, according to one study of 60,000 mail-order catalogs.
In short, the 30,000 customers that received rounded up pricing spent 8% less than the 30,000 catalog recipients of 99 cent pricing. (Note: The two catalogs were identical except for pricing.)
Granted, this study was performed 20 years ago. But with those kind of gains, the trend is sure to stick around for a long time.
I wrote on article on cell phone abuse, to be published on GigaOM, and was unable to use the following, which I thought was rather insightful:
“When cell phones were first introduced, they were expensive and obtrusive,” says Dr. Lisa Merlo, professor of psychology at the University of Florida. “As a result, the people who had them and used them did so for ‘important’ reasons. For example, physicians might have a cell phone while on-call. So, people excused the rudeness associated with talking on a cell phone because there was a legitimate reason for doing so. However, cell phones have become ubiquitous, and the rules have not changed to accommodate this.”