No matter if we are in the supermarket or shopping online: Every day we are manipulated by strategies from sales and price psychology. Extensive research has shown how we are seduced into buying by different price presentations. Not only the well-known nine prices play a central role, but we are also influenced by the color and the relative size of the price presentation. As is so often the case, those who know the marketing strategies can more easily protect themselves from them.

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Studies (small sample only):

Coulter, K. S., & Coulter, R. A. (2005). Size does matter: The effects of magnitude representation congruency on price perceptions and purchase likelihood. Journal of Consumer Psychology, 15(1), 64-76.

Felser, G. (2015). Werbe-und Konsumentenpsychologie. Springer-Verlag: Berlin.

Puccinelli, N. M., Chandrashekaran, R., Grewal, D., & Suri, R. (2013). Are men seduced by red? The effect of red versus black prices on price perceptions. Journal of Retailing, 89(2), 115-125.

Schindler, R. M., & Kibarian, T. M. (1996). Increased consumer sales response though use of 99-ending prices. Journal of Retailing, 72(2), 187-199.

Thomas, M., & Morwitz, V. (2005). Penny wise and pound foolish: the left-digit effect in price cognition. Journal of Consumer Research, 32(1), 54-64.

Thomas, M., Simon, D. H., & Kadiyali, V. (2007). Do consumers perceive precise prices to be lower than round prices? Evidence from laboratory and market data. Evidence from Laboratory and Market Data (September 2007). Johnson School at Cornell University Research Paper, (09-07).

Van Droogenbroeck, E., Van Hove, L., & Cordemans, S. (2018). Do red prices also work online?: An extension of Puccinelli et al.(2013). Color Research & Application, 43(1), 110-113.

Wu, C., & Cosguner, K. (2020). Profiting from the decoy effect: A case study of an online diamond retailer. Marketing Science, 39(5), 974-995.

Xiao, Q., Zeng, S., & Feldman, G. (2020). Revisiting the decoy effect: replication and extension of Ariely and Wallsten (1995) and Connolly, Reb, and Kausel (2013)‎. Comprehensive Results in Social Psychology, 4(2), 164-198.

Yang, S. S., Kimes, S. E., & Sessarego, M. M. (2009). Menu price presentation influences on consumer purchase behavior in restaurants. International Journal of Hospitality Management, 28(1), 157-160.

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Definition “psychology of pricing” – what is it? 

The psychology of pricing refers to the study of how people perceive and respond to different prices for goods and services. It involves understanding the psychological factors that influence people’s decisions to purchase or not purchase a product, as well as the ways in which prices can be used to influence people’s perceptions and behaviors.

One example of the psychology of pricing is the concept of “anchoring,” which refers to the tendency for people to rely on initial information as a reference point when making decisions. For example, if a person sees a product for sale at a high price, they may perceive it as being of higher quality or value, even if similar products are available at lower prices. This can lead people to pay more for a product than they otherwise might, simply because they are anchored to the initial high price.

Do 9-ending prices really work?

Are people really so stupid that they perceive a price of 99.99 euros as so much cheaper than a price of 100 euros? And do 99-ending prices really lead to more sales and profits? These questions have been studied for many years by researchers in the field of business psychology (or price psychology).

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Studies (only a small selection):

Anderson, E. T., & Simester, D. I. (2003). Effects of $9 price endings on retail sales: Evidence from field experiments. Quantitative marketing and Economics, 1(1), 93-110.

Asamoah, E. S., & Chovancová, M. (2011). The influence of price endings on consumer behaviour: An application of the psychology of perception. Acta Universitatis agriculturae et silviculturae mendelianae Brunensis.

Bizer, G. Y., & Schindler, R. M. (2005). Direct evidence of ending-digit drop-off in price information processing. Psychology & Marketing, 22(10), 771-783.

Bray, J. P., & Harris, C. (2006). The effect of 9-ending prices on retail sales: A quantitative UK based field study. Journal of Marketing Management, 22(5-6), 601-617.

Felser, G. (2015). Advertising and consumer psychology. Springer Verlag.

Felser, G. (2013). Consumer psychology. Kohlhammer Verlag.

Parsa, H. G., & Njite, D. (2009). Psychology of pricing: A review and suggestions. Handbook of Hospitality Marketing Management, 375-402.

Schindler, R. M., & Kibarian, T. M. (1996). Increased consumer sales response though use of 99-ending prices. Journal of Retailing, 72(2), 187-199.

Schindler, R. M., & Kibarian, T. M. (2001). Image communicated by the use of 99 endings in advertised prices. Journal of Advertising, 30(4), 95-99.