The idea is that $9.99 sounds like a better deal than $10.00. That’s because consumers generally prefer to pay less for products, and often associate prices ending in a nine with discounts or bargains. Indeed, many studies have shown that odd prices-especially those ending in the number nine-are far more common than round numbers, which end in zero, in marketplaces around the world. You wouldn’t know it from a trip to the grocery store or a stroll through the mall, though. The most plausible explanation is that people simply prefer round prices. Those percentages are far too high to be random and, given the straightforward nature of the electronic payment, can’t be attributed to people’s dislike for handling small change or adding up different denominations of cash. Here’s the most striking statistic: 57 percent of consumers picked round, whole-dollar amounts ending in zero, and an additional 4 percent chose to pay round, half-dollar amounts. More than 65,000 purchasers in 104 countries paid anywhere from a penny to US$150 for the game. To celebrate the first anniversary of the physics-based puzzle video game, the developers invited people to download the World of Goo for any price they wished using PayPal. It’s not often that something called ‘‘ The World of Goo’’ has anything to teach business managers. Managers should consider consumers’ overwhelming preference for whole-dollar amounts when setting prices. Bottom Line: Despite the prevalence of 99-cent stores and $1.99 price tags, consumers appear to favor round numbers when paying for goods and services.
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