Your second paragraph explains why you think there would be a price difference. That you can only choose 4.99 or 5.99 seems unrelated to your actual theory, and it doesn't make sense on its own.
It would be harder. But that would be regardless of the price. Going from $1 to $1.05 is the same as from $1000 to $1050. I am confused by how that’s confusing.
that's interesting, but they sure do seem the same. I'm thinking the only difference here is cultural. Like how we don't view reporting a price as $4.99 instead of $5 as unethical.
I also feel this way. For some reasons, I think my natural, quick feeling toward that would be that paying 1.99$ 'seems' more of an annoyance than paying 0$, and since it's not enough to be deemed worth the annoyance, I can picture myself putting 0$ instead of 1.99$.
For the same products, I feel I wouldn't change the price if it was listed at {3,4,5}.99$, I don't really know why. 1.99$ feels too close to an transaction fee, or some kind of things like that that feels like the money will be lost in The System. While paying >3.99$ seems to have more consistence, more purpose, since my intuition tells me that more of the value will end up in the proper pockets.
That's a very subjective take on this, but I support your idea that more people might have paid if the default would have been 3.99$.
Why bother with the .99? Why not just charge €6 / €5 - the .99 gambit is, IMHO trivially deceptive and - speaking for myself - if I am presented two purchase / subscription choices that are approximately equal, I will usually choose the product that acknowledges the fact that I am capable of rounding in my head.
Yeah, the “converts more” is another way of saying “luring people into thinking it's cheaper than it really is”. Let's be honest: $6 and $5.99, while matematically different, is for all practicalities the same price: $6. So if it really “converts more” (and does it really or is it just a myth?) it must be because people are seeing $5.99 as cheaper than $6, when the amounts are really the same. That comes across as dishonesty in my eyes, I'm sorry.
It's not about what you think about the particular price, it's about how you view the relative price. If one item is 9.99 and the next is 10.00, there's no practical difference in price, but a huge difference in relative attraction to shoppers.
But my point is that doing that analysis is pointless, because the dollar amount is so low. The difference in price will never be more than a rounding error in a company's expenses, so it's not worth worrying about.
If someone at the company wants it, price point shouldn't be what's keeping the company from using it.
The psychology is (allegedly) simple. When you see a price like $4.99, unless you're pre-conditioned, you are expected to read it as FOUR-99, essentially $4, even though it's $5 for all practical purposes. Often it is styled as $4.?? to double down on this effect.
This looks silly, and many people, including me, have taught themselves to recognize this pattern and round the price correctly without a mental effort.
Some people, of course, fall for it; I suppose younger kids are heavily affected.
That's plausible, although as a relatively naive user, I always thought the 5.99 + 10% was just how they decided to calculate the price to scale with the cost of the order. I never thought that the 5.99 was all for the driver. I might be in the minority though, it would be interesting to see how masses of people generally read that language.
A similar thing to 2) is probably the reason seemingly every product is priced $x.99. Everyone is probably aware that's basically the same as $(x + 1).00 but when you're on auto-pilot maybe you still feel like the former is a meaningfully better deal. I mean, it must work given how common the practice is.
That's weird, if I wanted to manipulate the price to make it look like my $0.99 are a bargain, I wouldn't set the initial price at $999, as it will become obvious, but at something like $5.
How much do you think about spending 5 dollars? How much do someone who earn 10 times less than you think about that exact 5 dollars? Price categories absolutely make sense.
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