Do prices ending in .99 or 7 sell more?

Just-below pricing, a pricing strategy that places products a penny below a round value (e.g. $23.99 instead of $24), is a widely debated topic in marketing. Recently, a meta-analysis of 69 studies offered new insights into this field.

Perception of Quality and Purchase Intention

Contrary to common belief, "just-below" It does not reduce the perception of product quality. To be honest, these prices increase purchasing intentions without negatively impacting how consumers perceive quality.

This finding is relevant because it disproves the notion that lower prices automatically suggest lower quality. As we have seen many times, it is more complicated than that and it is a good idea for new brands to implement a price penetration strategy, rather than price skimming.

The Power of Price Psychology

When we see a "just-below" price, we tend to perceive a discount, even if minimal. This phenomenon is explained by the fact that, although price is an indicator of quality, its importance as a signal of quality has decreased over time. The customer is increasingly savvy.

Also, we tend to focus on the first few numbers of a price, rounding down (e.g. $14.99 feels closer to $14 than $15).

Strategic Application

The use of "just-below" it should be strategic, that is, done carefully and intelligently.

If, for example, all products have this type of price, the effectiveness decreases. This practice is most effective when highlighting specific items or during promotions and discounts, showing the original price next to the "just-below" discounted price.

As emerges from much scientific evidence, humans are more sensitive to comparisons than to absolute terms.

The price of the "gurus"

The use of a price that ends with the number 7, so widespread in guru communities, instead of the more common 9, may be a marketing strategy based on some psychological considerations:

1. Uniqueness and Attention: Prices ending in 7 are less common and can attract consumers' attention, differentiating themselves from the crowd.
2. Deal Perception: Some consumers may perceive prices ending in 7 as more original or as special offers, thus increasing interest in the product.
3. A/B testing: Companies can use prices ending in 7 to test consumer reaction to different price points in A/B studies.

However, the effectiveness of this strategy depends on the specific context of the market and target customers. We do not recommend applying it always and almost casually.

In fact, there are no definitive studies that demonstrate the universality of the effectiveness of prices ending in 7 compared to those ending in 9. Therefore, it is important to consider the context and behavior of your target audience when choosing this marketing strategy price.

Product and Consumer Considerations

It is also important to consider the type of product and consumer purchasing behavior.

For example, for impulse or emotion-based purchases, rounded prices may be more suitable. Additionally, the research found no significant differences between hedonic (e.g., perfume) and utilitarian (e.g., craft tools) products, but further studies may offer more specific details.

Implications

This research gives entrepreneurs an extra weapon in their arsenal of pricing strategies. It demonstrates the importance of understanding the subtle psychologies behind price perception and highlights the need for a more measured and strategic approach to pricing, rather than adopting a one-size-fits-all strategy for all products.

In conclusion, while the "just-below" pricing strategy has long been the subject of debate, recent results indicate that, if used correctly, it  can increase sales without damaging the perception of quality. These insights open new avenues for data- and evidence-based marketing strategies, allowing marketers to refine their techniques and maximize the effectiveness of their pricing campaigns.