In my introduction thread I mentioned that I am interested in the neuromarketing field and have followed courses on neuromarketing, I have a lot of knowledge on the matter and I am well-willing to share some of the basics with you to open your minds. Today we discuss the psychology behind the listing of $499.99 instead of $500.
Why $499.99?
Nearly all modern stores price their products at $499.99 instead of $500. The usual thought behind doing this is that people thing it as fourhundred-ninety-nine instead five hundred, the usual perception is that they think more of $400 than of $500. However studies have suggest that the reason is different.
A study tested how people reacted to different starting prices. They had three sample prices namely:
The explanation for this is that we tend to anchor prices (I will create a separate post about anchoring as it is vital in marketing) on the initial price. If, lets say you see a t-shirt in a store priced $40 you might guess that its wholesale price was $36 or $37, not very specific. If the item is priced $39.95 prices like $39.65 or $39.15 come to mind, as they seem similar to the anchored price.
This psychology can also be seen when someone puts up a product (for example a second hand veihcle) for $19950 instead of $20000 ,a price closer to their initial set price would appear when they listed at $19950. If you were to list the item at $19950 the bid might start with $19750 or something along those lines. However if you would say $20000, or even worse 20 K, the bid would tend to say $19000.
This was just a warm up, and many of you may already be familiar with the concept, but I liked to share it anyways. Ill upload some more of these frequently if you all like it, thanks for reading anyways!
Why $499.99?
Nearly all modern stores price their products at $499.99 instead of $500. The usual thought behind doing this is that people thing it as fourhundred-ninety-nine instead five hundred, the usual perception is that they think more of $400 than of $500. However studies have suggest that the reason is different.
A study tested how people reacted to different starting prices. They had three sample prices namely:
- $1,985
- $2,000
- $2,015
The explanation for this is that we tend to anchor prices (I will create a separate post about anchoring as it is vital in marketing) on the initial price. If, lets say you see a t-shirt in a store priced $40 you might guess that its wholesale price was $36 or $37, not very specific. If the item is priced $39.95 prices like $39.65 or $39.15 come to mind, as they seem similar to the anchored price.
This psychology can also be seen when someone puts up a product (for example a second hand veihcle) for $19950 instead of $20000 ,a price closer to their initial set price would appear when they listed at $19950. If you were to list the item at $19950 the bid might start with $19750 or something along those lines. However if you would say $20000, or even worse 20 K, the bid would tend to say $19000.
This was just a warm up, and many of you may already be familiar with the concept, but I liked to share it anyways. Ill upload some more of these frequently if you all like it, thanks for reading anyways!
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