Does anyone know why the items that are sold on the t.v are never rounded to the nearest dollar??? Why is it that people charge x amounts of dollar but always 95 or 99 cents??? Is it an economical reason???
2007-01-27 09:36:16 · 7 answers · asked by eternity 2 in Social Science ➔ Economics
Because you'll pay $19.99 for something and will think twice about forking over $20.00 for the same thing. It's sales psychology. Studies show we respond better to odd numbers.
2007-01-27 09:45:43 · answer #1 · answered by fuzzbutt 4 · 0⤊ 0⤋
No, it's a psychological reason. Apparently studies done way back when showed that people think they are getting a better deal. I mean this has been in marketing 101 for decades. It may have to do with selective perception, i.e. people see the dollar amount and overlook the "pennies". Research has shown people tend to focus on specific things and delete the other information. You can demonstrate this phenomena to yourself using other situations. For instance when you enter a room you focus on elements that interest you and ignore everything else that is happening around you. Just as a somewhat realistic scenario...say you walk into your friend's room, do you see the pencils, paper, or whatever on the desk, the details of a picture on the wall or what specific clothing is hanging off the chair/floor, or do you just focus on your friend and block out the rest from your mental picture?
Hey if you really want something to think about...how come they tell you if you call in the next 15 minutes you get a really special deal...or double the amount with "free gifts" thrown in.(hint...stimulate panic of losing out and make you think you really need that item NOW). Besides, if the item was really worth what they say, why would they want to throw in all that other stuff? And howabout those shipping charges. They are high enough that I submit most of the item's real cost is covered in that alone.
2007-01-27 09:58:37 · answer #2 · answered by fenhongjiatu1 3 · 1⤊ 0⤋
It's part psychological, and part logical. The fact is 19.95 is less than 20.00, which gives the company that can afford to offer the product at that price the slightest edge over those that can't.
Economically speaking, prices are NOT arbutary, and they do in fact represent the cost of producing and distributing that product, and the acceptable profit.
$0.05 X 1,000,000 units sold adds up to $50,000.00 dollars in potential revenue. If my company can make up that difference in volume then I can still win by offering the consumer the lower price, while my competitors may not be able to leave that 50 grand on the table. This will give me a greater share of the market if all things remain equal.
2007-01-27 10:03:16 · answer #3 · answered by mikie79 2 · 0⤊ 1⤋
The 9.95 stuff began as way to make people think the item was cheaper than if it was priced at 10.00. By now, it's so customary to do the fractional pricing that a whole number price tag sounds vaguely illegitimate -- like only drug dealers or someone fencing a stolen item would ask for a flat number.
2007-01-27 13:26:24 · answer #4 · answered by KevinStud99 6 · 1⤊ 0⤋
Because $19.95 sounds psychologically cheaper than 20 dollars.
2007-01-27 09:44:16 · answer #5 · answered by Anonymous · 1⤊ 0⤋
by way of fact there are no cents, they could stay as you listed them above. while you're asking what they could be rounded to the closest thousandth, it may be $17,000 and $a million,253,000.
2016-12-16 15:03:20 · answer #6 · answered by donenfeld 4 · 0⤊ 0⤋
because it is one way of making people believe it is the better price, and that is totally stupid.
2007-01-27 09:47:46 · answer #7 · answered by StarShine G 7 · 0⤊ 0⤋