Does anyone remember that Denny’s ad from when we were younger that went “$1.99 are you out of your mind??!” That darn ad got stuck in my head all the time, which is probably proof that silly jingles can in fact work. The more interesting part to me these days, though, is the 0.99. I somehow stumbled across this article today about the psychology of price tags (yes, random. Good ol Internet). The author argues that prices ending in 0.99 imply deals or bang for the buck, whereas prices ending in 0.00 imply quality. His comparison is between fast food restaurants vs. high end, poster stores vs. galleries. Apparently, people perceive something as a deal if it ends in 0.99 because it appears to be discounted, whereas something ending in 0 appears to be worth more. I do think psychologically something priced at $30 sounds more to me than $29.99 but if there were two options, a penny apart, I’d turn to other dimensions like product features, quality etc. If, however, there was only 1 item for sale and it was a matter of buying it or not, I might be more likely to buy if it seemed like a better price. Somehow adding that extra cent seems to make it a different sort of purchase.
And do you check out the price per ounce when you grocery shop, or just the overall unit price? For me, I check out the price per ounce. But often, a bigger container has a cheaper price per ounce, and then I have to consider whether I need the additional X ounces of whatever it is to make it worth it. Because if I DON’T need an additional X ounces, really I am wasting money on unnecessary product rather than saving- the smaller jar is still cheaper, just a higher cost per ounce. Stores like Costco make tons of moolah off of the fact that their price per ounce or unit is often cheaper- because you are buying a ridiculous amount of product per purchase. Do you really need 10,000 ounces of shampoo? Over time, yes. At once, no. But the perception of a cheaper price per unit may also drive you to buy more plates than you need, more socks than you need, etc.
One last thought: when do you NOT care about price, if ever? Are there items you will buy, regardless? Does it depend on how much you need it, e.g. the difference between toilet paper and mascara? Or are there simply things you love enough that you will always buy them, even if the price goes up, the competitor costs less, or the need just isn’t there? I tend to scrutinize food labels pretty carefully, so I know that I will buy something more expensive if the label shows fewer artificial ingredients (perceived value) than the cheaper competitor. It’s all about priorities, I suppose.
Edit: Upon rereading this, I just can’t resist adding a couple of fun trivia points, courtesy of my days as a 1900s researcher:
- Modern department stores helped popularize the use of price tags. Before, customers haggled. Putting price tags made commerce more efficient and also fed into the new development of conspicuous consumption
- The 1855 World’s Fair is often listed as the first to include price tags. Previously, products were on display simply to show the great advances made by humanity. Adding price tags injected a new level of consumerism into the Fairs, too, and made the objects on display objects of covet- but you couldn’t actually buy them!