I understand few reasons, for example if something costs 5 € it looks more expensive like if it costs 4,99 € because usually people notice first number more. But I just found out that there was a study, where for example something was priced 47 €, then they increased price to 49 € and sales increased. Then they decreased price to 48 and sales decreased too. I cant find any explanation about this particular thing. Or I just dont know how to write it into google, since english is not my first language.
EDIT: people, please, read my post carefully. Almost everyone answers for question I didnt asked
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I suspect it’s because it more closely matches what we expect a price to be. If all prices end in 9, then prices that don’t will seem initially unusual.
Because the brain focuses on the first number of it.
So when you read 4.99, it tricks your brain thiinking it closer to 4, even if in reality it’s closer to five.
And it’s even more efficient with number before adding a digit, like 9.99 or 99.99.
It’s called psychological pricing.
Daniel Kahneman, in his book “Thinking Fast and Slow…”, differentiates between two types of decision making. One “fast”, superficial, pattern based, and one “slow”, analytical, rational.
When people look at prices, they tend to do the first version. It has nothing to do with the last figure, it has to do with the first one. That’s what people see first, and that’s what the “fast decision” is based on. $199 is way more attractive than $200 because, if you don’t take the time to think the “slow” way at all, you just base your decision to buy on a pattern: on what the usual relationship is between a three figure number that starts with 1, and one that starts with 2 … then you can make a very bad decision.
That’s because, usually, if the numbers are random rather than engineered to fool you, the difference is about 100. So, if you just go by pattern, that’s what you “see” there. A difference of about $100.
This is real, btw. I know it sounds ludicrous, but this is something we all do, in some situations. Obviously, we don’t all fail to notice the real difference between $199 and $200, but we all commit the same type of error in certain situations, when we don’t take the time to analyze the situation. Kahneman won a Nobel in Economics for his work on psychologically driven economic decisions, he’s not talking out of his ass.
The book is quite boring, but, if you read it, he teaches you to catch yourself and don’t commit this kind of thinking error. And many more.
P.S. The rest of what you wrote is probably down to the study being flawed. Feel free to link to it, but even just from your description, they didn’t seem to control for other variables. There are all sorts of reasons why a product may sell less one month, and more the next, that have nothing to do with a small change in the price. Maybe they were selling umbrellas and it didn’t rain the first month:)
it becuase they can sell something for £9.99 and saying less than 10 quid sounds like its cheaper
It’s common to see prices like $4.99, $49.99, $499.99 Because it checks consumers into thinking product or service is cheaper than it is. They think oh it’s less than five dollars, that’s cheap. Same goes for just $49, It’s less than $50 so people unconsciously view it as a good price. $48 confuses people because why would anything be $48 they think. People have weird associations with numbers.
Because you’re getting a deal. Those shoes aren’t $100 they’re only $99.99.
Common psychology. you get to quote “below £5” for £4.99.
We are then so “programmed” to see prices in this way (containing 9), If you priced it at £4.75, your brain rejects it. Doesn’t really work if you focus – but really, how many times do you focus when you shop? You care more “does the shop have the thing”.
And even if you do – there’s 10 more that don’t.
.99 does not look more attractive.
$4.anything looks like less than $5.anything. The fact that $4.99 is basically the same thing as $5.00 doesn’t matter, because you’re only paying attention to the $4 and $5 parts.
It’s an old vestige from when the dollar held more value. People are more likely to look at the first number and ignore the change. When the value of the dollar was higher, seeing something listed for 1.99 vs. 2.00 made it seem like you were saving a whole dollar. It has never changed and is not just expected in the consumer space.
It might not be true, but I also heard that these prices meant that the cashier had to open the till to give a penny change, so had to register the sale and couldn’t steal the money.