Please note: This post is for creators only. If you’re not a creator, please close this tab and go about your daily purchasing.
Waiting.
Okay, great. Now that it’s just the creators, here’s some information about a pricing strategy you might consider trying out if you’re aren’t already.
But first, look at the image below and count back from 10. Go ahead.
9.99… Look deeply at the price… 8.99… You’re feeling veeeery frugal… 7.99… You’re getting your credit card… 6.99… You’re a savvy consumer… 5.99… Oh, the savings… 4.99… Spend… Consume… Buy…
Yes. The magic of the 9. You see it everywhere. On TV, in the grocery store, in car lots. Prices ending in dollar values of 9 and/or cent values of 99 are everywhere. And we’re smart people. We know that $19.99 is essentially $20, but even knowing that doesn’t stop us from, well, not knowing that.
In languages that read words left to right (and, interestingly, in many languages that read right to left), we read and process numbers, naturally, from left to right. And apparently there’s a decay as we travel along. According to several studies, as we’re reading prices, we either round down after the whole numbers in our minds or essentially forget what comes after the beginnings of prices. Additionally, other research suggests that when we see a price ending in 9 or .99, we believe the creator has priced the item at the lowest point possible and that we’re getting a great deal. What suckers we are.
At Gumroad, we’ll stop just shy of letting you charge tenths of cents (come on, gas stations, that’s cheating) or allowing the font on your change to be smaller on-screen. But is there anything to this stuff in the e-marketplace? Let’s see.
The following chart compares the conversion rates (the number of people who viewed products over the number of people who bought them) of every item available on Gumroad in whole dollar prices with every item available on Gumroad with prices at one cent less.
Across the board, prices ending in .99 have higher conversion rates than prices ending in one cent higher, and in one case, the conversion rate is twice as high. Does that mean that you should rush to change all of your prices? Well, hold on. Something to consider is the Fancy Factor. This completely made-up term refers to the psychological pricing system used by many high-end restaurants and retailers. You’ll find that these places will go the other way by using whole numbers (and often only even numbers) to bolster an atmosphere of elegance and high value. So put that in your tiny teacup and mull it over. What are you selling? Store-brand mac & cheese or geoduck clam with crême fraîche and a lily bulb? Likely it’s something somewhere between the two.
We’ll dig more into psychological pricing in later posts. In the meantime… okay, buyers! You can come back now.
This was originally posted by Travis Nichols on The Gumroad Blog on October 18th, 2013.
