Psychological pricing beyond $9.99

The psychology of pricing goes way further than just setting prices a few cents below a whole number.

Products that are recreational or luxurious benefit from rounded prices: Consumers were more inclined to buy a bottle of champagne when it was priced at $40.00 rather than at $39.72 or $40.28. However, for purchases that are utilitarian—a calculator, in this experiment—participants were more likely to buy at the higher non-rounded price.

Presumably we now associate non-round-number pricing with products competing on price. And that doesn’t mesh well with luxury goods, making them seem less rather than more desirable.

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