Reduce Digit Averages For Prices in the Thousands
Certain digits can make a price feel lower. Instead of reducing the left digit, sometimes it's more effective to reduce the digit average.
Unlocked
Overview
You should typically reduce the left digit in a price.
$5.99 feels lower than $6.00 because your eyes are anchored to the left digit.
But $5.99 has a couple 9’s – which are high digits. Hmm, is that bad? Would it feel larger?
Interestingly, yes.
Usually this effect is trivial because the left digit is more persuasive. Though it becomes important for prices in the thousands (e.g., $1999; Lin & Wang, 2017).
Ironically, customers pay more attention to these later digits.
Researchers tested a variety of sale prices: $3,111, $3,222, $3,333, $3,444, $3,555, $3,666, $3,777, $3,888, and $3999. For each price, they showed an original price that was $895 more.
Sale prices with low digits (e.g., 1, 2, 3, 4) consistently performed better (Dogerlioglu-Demir, Akpinar, Gurhan-Canli, & Koçaş, 2022).
Therefore, switch your mindset in the thousands:
- Bad: How can I reduce the left digit?
- Good: How can I reduce the digit average?
Instead of choosing $1999, try a low $2000 price instead.
- The average of 1-9-9-9 is 7.0.
- The average of 2-1-1-1 is 1.5.
Caveats
- Be careful with 0. We need more research to verify these effects.
- The study focused on USD currency.
Other New Stuff
- Trying to Be Cool - People boost their status by trying to be wealthy or cool. But these two ideas are inversely related: Try to be wealthy? Admirable. Effortlessly wealthy? Pathetic. Try to be cool? Pathetic. Effortlessly cool? Admirable.
- Product Downsizing Seems Less Fair - Customers believe that smaller packaging is more unfair than increasing the price. You can curb these negative emotions by transparently communicating the smaller size, while showing internal costs to justify this change.
- Cute Pets Increase Home Rentals - Listing your home on AirBnb? Show a cute pet in your photos. You'll seem friendlier and increase bookings.