[math-fun] $19.99 and all that
We all know that subjective price is a nonlinear function of monetary price (that's just a fancy way of saying that $19.99 "feels" like significantly less money than $20). But is it possible that subjective price is (for some people, under some circumstances) a non-monotone function of monetary price? That is, might $7.01 "feel" like more money than $8 (for instance)? I'd be curious to know if this has ever been studied. For that matter, is there experimental evidence backing up the idea that you can make people significantly more willing to buy a $20 consumer product by knocking a penny off the price? I should mention that I'm aware that there have been instances in which raising the price of an item increased the demand for the item (because the higher price marked it as a luxury item, and then people wanted to buy the prestige that came along with the higher pricetag). But that's not quite what I'm asking about. Jim Propp
For more on this subject you might start here: http://en.wikipedia.org/wiki/Psychological_pricing Another paper that Google found on this subject: http://marketing-bulletin.massey.ac.nz/V8/MB_V8_N1_Holdershaw.pdf On Tue, Dec 9, 2014 at 9:46 PM, James Propp <jamespropp@gmail.com> wrote:
We all know that subjective price is a nonlinear function of monetary price (that's just a fancy way of saying that $19.99 "feels" like significantly less money than $20).
But is it possible that subjective price is (for some people, under some circumstances) a non-monotone function of monetary price? That is, might $7.01 "feel" like more money than $8 (for instance)?
I'd be curious to know if this has ever been studied.
For that matter, is there experimental evidence backing up the idea that you can make people significantly more willing to buy a $20 consumer product by knocking a penny off the price?
I should mention that I'm aware that there have been instances in which raising the price of an item increased the demand for the item (because the higher price marked it as a luxury item, and then people wanted to buy the prestige that came along with the higher pricetag). But that's not quite what I'm asking about.
Jim Propp _______________________________________________ math-fun mailing list math-fun@mailman.xmission.com https://mailman.xmission.com/cgi-bin/mailman/listinfo/math-fun
On 12/9/2014 6:46 PM, James Propp wrote:
We all know that subjective price is a nonlinear function of monetary price (that's just a fancy way of saying that $19.99 "feels" like significantly less money than $20).
But is it possible that subjective price is (for some people, under some circumstances) a non-monotone function of monetary price? That is, might $7.01 "feel" like more money than $8 (for instance)?
I'd be curious to know if this has ever been studied.
For that matter, is there experimental evidence backing up the idea that you can make people significantly more willing to buy a $20 consumer product by knocking a penny off the price?
I think the market research has shown that this depends on the product. For some products knocking off a couple of pennies, $20->$19.95, makes the product seem like a much better deal. But for other products it may be perceived as implying an inferior, cheap product. Brent
I should mention that I'm aware that there have been instances in which raising the price of an item increased the demand for the item (because the higher price marked it as a luxury item, and then people wanted to buy the prestige that came along with the higher pricetag). But that's not quite what I'm asking about.
Jim Propp _______________________________________________ math-fun mailing list math-fun@mailman.xmission.com https://mailman.xmission.com/cgi-bin/mailman/listinfo/math-fun
Major retailers use the final digits of the price to signal which items are "marked down, specially priced, rebate items, discontinued, or will be not be restocked". I'd bet this is not for psychological reasons, but one never knows. http://lifehacker.com/know-the-secret-price-codes-at-major-retailers-to-save... http://lifehacker.com/save-even-more-money-at-costco-by-knowing-their-secret... On 10 December 2014 at 05:08, meekerdb <meekerdb@verizon.net> wrote:
On 12/9/2014 6:46 PM, James Propp wrote:
We all know that subjective price is a nonlinear function of monetary price (that's just a fancy way of saying that $19.99 "feels" like significantly less money than $20).
But is it possible that subjective price is (for some people, under some circumstances) a non-monotone function of monetary price? That is, might $7.01 "feel" like more money than $8 (for instance)?
I'd be curious to know if this has ever been studied.
For that matter, is there experimental evidence backing up the idea that you can make people significantly more willing to buy a $20 consumer product by knocking a penny off the price?
I think the market research has shown that this depends on the product. For some products knocking off a couple of pennies, $20->$19.95, makes the product seem like a much better deal. But for other products it may be perceived as implying an inferior, cheap product.
Brent
I should mention that I'm aware that there have been instances in which raising the price of an item increased the demand for the item (because the higher price marked it as a luxury item, and then people wanted to buy the prestige that came along with the higher pricetag). But that's not quite what I'm asking about.
Jim Propp _______________________________________________ math-fun mailing list math-fun@mailman.xmission.com https://mailman.xmission.com/cgi-bin/mailman/listinfo/math-fun
_______________________________________________ math-fun mailing list math-fun@mailman.xmission.com https://mailman.xmission.com/cgi-bin/mailman/listinfo/math-fun
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