🎓 No, .99 prices don’t hurt quality perceptions

Just-below prices don’t hurt perceptions of quality as we previously thought. And they feel cheaper than rounded prices (e.g. $8.99 vs $9)                                                                                                                                                                                                                                                                                                                                                                                                                 December 12, 2023 | [Read Online]( No, .99 prices don’t hurt quality perceptions Just-below prices don’t hurt perceptions of quality as we previously thought. And they feel cheaper than rounded prices ($8.99 vs $9) [Thomas McKinlay]( [fb]( [tw]( [in]( [email](mailto:?subject=Post%20from%20Ariyh&body=No%2C%20.99%20prices%20don%E2%80%99t%20hurt%20quality%20perceptions%3A%20Just-below%20prices%20don%E2%80%99t%20hurt%20perceptions%20of%20quality%20as%20we%20previously%20thought.%20And%20they%20feel%20cheaper%20than%20rounded%20prices%20%28%248.99%20vs%20%249%29%0A%0Ahttps%3A%2F%2Fariyh.beehiiv.com%2Fp%2F99-prices-dont-hurt-quality-perceptions) New to [Ariyh](? This is a 3min practical summary of a scientific study 🎓 Join 24,595 marketers who use science, not flawed opinions 📈 [Subscribe here]( Today’s insight is brought to you by… [Zaplify]( Stop wasting hours prospecting manually. [Zaplify]( is your dead-simple [free AI sidekick](. It: - Finds prospects among 600M+ leads - Engages them across channels - Hands you warm leads ready to buy The [free forever plan]( includes full access plus 20 new leads every month. No credit card required. [Get automated prospecting]( 🏝️ Holiday break The time of the year has come to start to unwind and recharge, so we can start 2024 with a bang. Ariyh will be on pause for the next two weeks, see you on January 2nd 😁 Thank you for this fantastic year together! 📝 Intro We've seen in previous insights and in [Ariyh's Pricing Playbook]( that just-below prices are effective at making a price look significantly cheaper (e.g. $15.99 vs $16 feels much cheaper than the $0.01 cheaper that it actually is). Until today, based on a few notable studies, we thought that just-below prices had a big downside: they make the products priced that way seem lower quality. A new large-scale analysis of 69 studies on the topic found that this fear was overblown. Just-below pricing just got a whole lot more attractive. P.S.: [Ariyh’s Pricing Playbook]( will be updated next year with even more of the latest research. If you buy it now, you will have access to future updates for free. Previous insight: [Take-back programs boost profits]( (more insights [here]() Just-below prices increase sales without hurting how people perceive a product’s quality Topics: Pricing | Promotions For: B2C. Can be tested for B2B. Research date: April 2023 📈 Recommendation Use just-below prices to make your product seem cheaper (e.g. $24.99 instead of $25). Doing this won’t hurt how people perceive the quality of your product, and they will be more likely to buy. Be strategic when using just-below pricing to make it more effective. If all your products have just-below prices, people won’t consider any one item a particularly good deal compared to if it’s only on select items. 🎓 Findings - Just-below prices (e.g. $3.99) increase purchase intentions compared to rounded prices (e.g. $4.00). It does so without affecting how people perceive the quality of a product. - As part of a meta-analysis of 69 previous scientific studies in this topic, researchers found that: - People had slightly higher purchase intentions when the price was just-below a rounded price (e.g. $3.99 vs. $4.00) - People perceived the product as a better deal when just-below pricing was used - Using just-below prices didn’t impact how people perceived the quality of the product - When asked to recall product prices a few days later, people remembered the just-below products as being lower priced - The effect is stronger: - When the change is in the first digit or a digit before the decimal place (e.g. $79 vs. $80) - In countries where just-below pricing is less common. 🧠Why it works - When we see a just-below price, we perceive a discount. Even if it’s only a small gain (e.g. paying $9.95 instead of $10), the impact on whether we’re getting a good deal is [disproportionately larger]( than the actual benefit itself ($0.05). - While price is one of the tools we use to judge quality, the impact of prices as a signal for quality has [become weaker in recent years](. - We tend to [focus more on the left digits]( of prices - so we may round $14.99 to $14 rather than $15. After seeing the difference in the left digits, we’re likely to [stop comparing the difference]( between other digits, including the decimals. 🚀 Turn your website into a lead generation machine Imagine if your website could attract more potential customers effortlessly. That's exactly what [dofollow.com]( does for you. They help businesses rise to the top of Google search results, even if you're not an SEO expert. How? By getting you the world’s most powerful high-quality backlinks to your business. From sites like BigCommerce, Canva, Cloudways & 100s more. [Get pricing for your business]( This announcement was sponsored. Want your brand here? [Click here](. ✋ Limitations - The study accounted for hedonic (e.g. decorative candle) vs utilitarian (insect-repellant candle) products but did not find any significant difference. This could go against previous research that [rounded prices are more effective for pleasurable items]( (e.g. a chocolate bar should be $2, not $1.99). More research is needed to confirm this. - The analysis found the effect to work for both inexpensive and expensive products. However, it did not investigate extremes (e.g. a house) or luxury items. 🏢 Companies using this - Most companies commonly use just-below prices, especially [when offering discounts](. - The technique is particularly popular in the electronics industry for products such as televisions, laptops, and speakers. Brands with price-sensitive products in other categories, including household products, clothing, and food and drinks also use this often. - In the service sector, this is also commonly used for subscription services and software. - Just-below prices are uncommon in the luxury industry and for other very premium products. Target uses just-below pricing across categories, including for its pasta and grains. ⚡ Steps to implement - You can use just-below prices in most situations and for most products. - It’s even more effective when used for promotions and discounts while [showing the original price]( next to the discounted just-below price. - This pricing works best when you use it to highlight specific items - if all your products use .99 pricing, it’ll be less effective. - Consider why people buy your product. If it’s an exciting, impulsive, or emotional purchase, [other research]( shows that it might be better to use rounded prices. - You can make the price seem even more attractive by placing it [below the item](, and if you’re targeting men, by writing [the price in red](. - Learn all the best ways to optimize your prices with [Ariyh’s Pricing & Promotions Playbook](. 🔍 Study type Meta-analysis (of 69 studies between 1972 and 2020, with 40,541 total participants) 📖 Research [A meta-analysis on the effects of just-below versus round prices.]( Journal of Consumer Psychology (April 2023). 🏫 Researchers - Eve Sarah Troll, Leuphana University of Lüneburg - [Julius Frankenbach,]( Saarland University - [Malte Friese](, Saarland University - [David D. Loschelder,]( Leuphana University of Lüneburg Remember: This is a new scientific discovery. In the future it will probably be better understood and could even be proven wrong (that’s [how science works](). It may also not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely. Rate today’s insight to help me make Ariyh's next insights 🎓 even more useful 📈 How was today’s insight? [Loved it]( | [Great]( | [Good]( | [Meh]( | [Bad]( - 📘 Supercharge your business with Ariyh’s [Playbook of Pricing & Promotions]( or [Playbook of Ecommerce]( - 📣 Want to advertise on Ariyh? [Here’s all you need to know]( - 🎓 New to Ariyh? -> Subscribe below or read other [3-min marketing insights]( [Subscribe here]( [fb]( [tw]( [ig]( [in]( Update your email preferences or unsubscribe [here]( © 2023 Ariyh Calle Bailen, 11 Barcelona, Barcelona 08010, Spain [[beehiiv logo]Powered by beehiiv](