How Price Endings Convey Different Meanings to Shoppers
The symbolic value of each number is unique and affects beliefs of shoppers.
Posted May 28, 2018
“Numbers have life; they’re not just symbols on paper.” – Shakuntala Devi
Every price conveys information. Not just about how much something costs, prices convey useful information that shoppers use to make inferences. On this blog, I have written before about how prices can signal an item’s quality. Just because something has a high price, many shoppers will believe that it will be of high quality.
Prices have symbolic visual value
In this blog post, I want to write about the visual symbolic value of prices. Relatively superficial and pliable properties of a price such as whether it ends with a 0, 5, 9, or with something else, and whether the price is a nice round number or has jagged edges (like $3.23), imbue it with meaning. Prices ending with each number produce unique inferences in shoppers.
The importance of the visual symbolic properties of a price is two-fold. First, behavioral economics and cognitive psychology researchers have discovered that superficial and inexpensive visual changes to prices can enhance their symbolism in powerful ways, and influence buying behavior. Nowadays, marketers test and implement these price changes quickly and inexpensively.
Second, the means by which a price’s visual symbolic properties affect consumers are subtle and work below the radar. These effects can be far more influential and durable than the effects of the literal economic information or quality cues conveyed by the price. What’s more, the science of visual symbolic properties is rich, meaning there are many different avenues to influence customers depending on the seller’s particular goals.
The influence of just-below prices
The widely regarded conventional wisdom is that price endings which are just below a round number (also known as “charm prices”) communicate a lower price because the consumer underestimates its magnitude. For example, a shopper will convert prices of $9.99, $9.98 or $9.95 to “nine dollars and something” instead of “ten dollars,” leading to a more favorable view of the product’s value than the round $10 price. Marketers have embraced just-below price endings. Studies show that anywhere between 30% and 65% of all prices presented to consumers end with 9.
Different from consumers’ underestimation because of just-below prices, they also encode information about the item or the seller, creating a low-price image. For those interested in academic jargon, these two effects of just-below price endings, underestimation, and low-price image, are called as “level-effect” and “image-effect” respectively by researchers.
The unique symbolic value of each price ending
Consumer psychologist Robert Schindler expanded the scope of visual symbolic properties of prices, by suggesting that a variety of symbolic meanings can be conveyed by different price endings. The list below includes some of the meanings that Schindler proposed for each ending value plus additional meanings discovered by other behavioral economists more recently.
- Inference made my shopper: Price ending
- The item has a low price: 5, 8, 9, 95, 99
- The item is of poor quality: 9, 99
- The seller offers good value: 9, 99
- The seller sells cheap, poor-quality items: 9, 99
- The price has been reduced from its original higher value: 3, 7, 99
- The seller is trying to manipulate the shopper: 9, 99
- The item’s price hasn’t been raised recently: 5, 8, 9
- This price is a discounted or sale price: 3, 7
- The price is not fixed, it is negotiable: 0
- The item’s price is high: 0, all-text
- The item is of high quality: 0, all-text
- The seller is upscale (sophisticated, classy, prestigious): 0, all-text
- The seller is likely to sell unique products: 2, 3, 4, 6, 7, 8
- The seller has given thought to establish its prices: 2, 3, 4, 6, 7, 8
- The seller has a playful approach to business: 2, 3, 4, 6, 7, 8
As shown in the list, just-below price endings can produce different, and even contradictory, inferences about low prices. Some emphasize either the product’s or the seller’s superior value. Others highlight its poor quality and cheapness. The association of a 9-ending with low price, in turn, can lead to a variety of inferences. Some shoppers may conclude that because the product has a low price, its quality must be low. Others may reason that the seller has taken the trouble to squeeze out costs from its operation and is providing a good value to consumers. They may simply conclude “Prices ending in 9 = low prices = good deals.” Still others may make these inferences in a relative way, by considering that the price is low relative to other sellers, or that the price is lower than it used to be. In fact, it is because of the favorable symbolic meanings that prices ending with the digit “9” are used so frequently.