Sunday, September 9, 2007

Consumer Perception of Sale Prices... Less is More

The Journal of Consumer Research released a new study showing that consumers determine the value of a sale price based primarily on the right digit. If the right digit is less than 5, the sale price is perceived as a greater value.

"The researchers show that "right-digit effect" influences consumer perception of sale prices. When the right digits are small, people perceive the discount to be larger than when the right digits are large. In other words, an item on sale for $211 from the original price of $222 is thought to be a better deal than an item on sale for $188 from an original price of $199, even though both discounts are $11."

Small Business Marketing Lesson:

Don't be fooled by the traditional "$X.99" approach to pricing and discounting. Experiment with the "right-digit effect" the next time you are setting prices and see how it goes.

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