Researchers Manoj Thomas, Daniel H. Simon and Vrinda Kadiyali conducted many studies looking at the effects of precise pricing. Precise pricing involves using a price that avoids round numbers and appears precise. $211.35 is considered precise. $210.00 is considered rounded.  A recent study found that ‘precise prices’ (say $395,425) are most often judged less than […]

Researchers Manoj Thomas, Daniel H. Simon and Vrinda Kadiyali conducted many studies looking at the effects of precise pricing. Precise pricing involves using a price that avoids round numbers and appears precise. $211.35 is considered precise. $210.00 is considered rounded. 

A recent study found that ‘precise prices’ (say $395,425) are most often judged less than ‘round number prices’ (say $395,000) of similar magnitudes. Another study found that participants were willing to pay more for a house when the seller used precise pricing (say $364,578) rather than round-number pricing (say $365,000). 

Precise pricing has been consistently found to be more attractive to consumers. Analysis suggests that consumers view such pricing as better value. 

Research by Michael Santos, Craig Leve, and Anthony Pratkanis looked at the impact of precision in panhandling or begging. Students were recruited to beg – requesting one of three amounts asking passers-by – ‘Can you spare …’. The study found that just 17% of passers-by gave money to students asking for either 25 cents or 50 cents. The same study found that 73% of passers-by gave money to students asking for 37 cents. When asked for what appeared to be a precise amount (37 cents), there was a 54% increase in the number of people giving money – with passers-by less inclined to refuse the donation request automatically or without thinking. 

Collectively, these studies highlight the potential of precision pricing – or setting a price point that is as ‘precise’ as possible. Analysis suggests that precise pricing will attract attention and establish credibility. The more precise the price point – the more likely it is to attract attention and the more credible it will be seen to be. Credibility, in turn, creates a sense of value. It suggests to the consumer that the brand has thought it through and identified the price that offers the best value.

Should you be using ‘precise pricing’? Will precise pricing attract more attention to your offering and establish the credibility needed to maximise sales? 

D. John Carlson – Marketing Consultant Perth.

Maximising performance through ethical customer centric marketing, branding, and communication.

Advisor – Director – Mentor.

Consumer insights – strategic planning – marketing consultancy – branding consultancy – communication consultancy – culture consultancy – strategic marketing advisor.

www.djohncarlsonesq.com