Try this at home… read the following numbers aloud:
Notice anything funny? If you are like most people, you read the comma-less 1900 as “nineteen-hundred” and the comma’d 1,900 as “one thousand nine-hundred.” Also, notice that the first (1900) takes less time to say if spoken and fewer letters to write if written.
Now, try this question: If you were buying, say, a shiny a new 3D TV, would you rather pay $1900 or $1,900?
I know it seems like a trick question, but researchers Keith Coulter, Pilsik Choi and Kent Moore wanted to know whether the way a price is either spoken or written impacts how people perceive the magnitude of the price (economists use the term “magnitude” to refer to how big or small people think a price is. Big is more. Small is less.). In their study, the researchers presented participants with products and their prices. Some prices were printed with commas, some without. For each item, they asked participants to rate the magnitude of the price on a scale from 1 to 10. If they thought the price was high, they rated it a 10. Experimenters tried it with both oral (the prices were given via fake radio ads) and written presentation of the prices.
Whether in oral or written form, when people are presented with the shorter (to say or read) version of the number — 1900 instead of 1,900 — they rated the price as smaller. In other words, because it takes less time to say, participants actually rated $1900 as less than $1,900.
As a further test of the phenomenon, experimenters tried the same basic design but changed the prices so that now they had cents appended to the end. In other words, would people perceive the price $1549.00 to be different from $1549? They further tested the trick by adding a few cents to one of the prices and having another set of participants rate the price magnitude of a bunch of items. Here, even when the price was increased by only a few cents, say, $1346.29 instead of $1346, participants rated the first price as substantially more (1346.29 is actually .02 percent more than 1346, but participants rated it as 8 percent more – a 400 percent difference).
If you are selling a product, the message is clear. If you want people to perceive the price to be more reasonable, leave off the commas and the cents when you say and write the prices. People will perceive the price to be a bit more reasonable. If you are a consumer, you are forewarned. Notice how prices are presented to you. Notice how you react to them. If you find yourself attracted to the $49 deal more than the $49.00 deal, you may want to rethink.
At BeyondThePurchase.Org, we are researching the connection between people’s spending habits, happiness, and values. To find out more about how your personality and values influence how you relate to money and spending, we encourage you to first Login or Register with Beyond The Purchase and then take our Sucker Rumination Scale and the Tightwad/Spendthrift Scale. We think you may learn a lot about how you and why you spend your money the way you do.
This blog post was written by Kerry Cunningham, a member of the Personality & Well-being Laboratory and recent M.S. graduate in Industrial-Organizational Psychology at San Francisco State University.
This post is based on the following research paper:
Coulter, K. S., Choi, P., & Monroe, K. B. (2012). Comma N’ cents in pricing: The effects of auditory representation encoding on price magnitude perceptions. Journal of Consumer Psychology, 22(3), 395–407. doi:10.1016/j.jcps.2011.11.005