MIT Study on Prices Ending with $9

price tagFound this post from Daniel Scocco on his great site: DailyBlogTips

Did you know that around 60% of all retail prices end with a 9 digit? No one is sure about why the digit 9 in specific, but most marketers and economists know that ending a price with it tends to increase sales.

For those who want empirical evidence, back in 2003 some MIT folks did a quite interesting study around the subject. The basically used a mail-order company that sells women’s clothing, and the priced the same pieces at three different levels: $34, $39 and $44. Care to guess the results?

The $39 price tag outsold the other, by a factor of 15% up to 30% in some cases. If you didn’t get the insight yet, let me re-phrase it: the same product sold more units with a price of $39 then with a price of $34!

The same results were found when they used $44, $49 and $54 price levels, as well as $54, $59 and $54. In other words, the price tag ending with a 9 virtually always outperformed the other price tags, were they higher or smaller.

Here’s the conclusion from the paper:

We have presented three ?eld experiments demonstrating that $9 price endings increase demand but that the effect is context dependent. The effect is stronger for new items that customers have seen less frequently in the past.

Pretty interesting huh? Here’s the link to the PDF if you want to read it in full.

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