Round Pricing Preference
We perceive round numbers as more trustworthy and representing higher quality
Mounting evidence suggests that consumers’ desire to deal in clean, round numbers trumps their hope that odd prices signal some kind of sale.
Lynn, Flynn, & Helion (2013) Do Consumers Prefer Round Prices? Journal of Economic Psychology
Regardless of the seemingly-limitless number of 99p stores and £*.99 price tags we see on our high street and shopping malls, consumers appear to favour round numbers when paying for goods and services.
Rather naturally, when given the option of paying what they want, we often choose round pay-what-you-want prices. We often leave tips that sum with the bill to a nice round amount. we also often put amounts of petrol into our cars that result in round sales totals. We crave simplicity with every transaction.
Takeaways for decision-makers
- Consider consumers’ overwhelming preference for whole amounts when setting your prices or defining your pricing strategy. They’ll thank you for it with their loyalty.
- Given our natural inclination to follow suit with our tipping and petrol, appreciate that the round-pricing preference is a fundamentally-human tendency. Consider then the positive, human-friendly impact upon your brand of mirroring this bias.
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- Aspirational membership schemes and belonging The category size bias provides a credible explanation for why we human beings tend to associate with large groups that are viewed favourably by society. Being part of a large and “desirable” social group can make others believe that we also possess the many qualities of its members. For small businesses, it suggests that forming or being a part of a consortium or large and high quality networking group can dramatically elevate your brand image.
- Communicating category sizes to nudge effectively Highlighting the differences between the large and small categories is highly likely to enhance the effect of the Category Size Bias. For instance, for software companies, stating that there are 10 features in the premium version versus 4 in the free version will help nudge a decision towards the premium version
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- The findings from this braingem can nudge better healthcare choices, encourage consumption of a given product, and lead to more confident consumer decisions.
- We mistakenly believe that items in larger categories have a higher probability of being picked than ones in smaller categories, despite all items having an equal chance of being picked.
- We’ll spend or gamble more money on items put in larger categories.
- We’re more likely to take action from tasks when they’re in a bigger list, over a smaller list.
- We once we put something into a group, we perceive it to adopt all the characteristics of that group. This suggests that small companies should foster alliances with similarly-principled, more established companies.
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