I used to build ecommerce presences, many of which were for old catalogue merchants making the jump to ecommerce.
It was eye-opening. Even in the heyday of catalogue shopping, which this paper is from the tail end of in the early noughts, conversion rates were abysmal - and they were entirely acceptant of that, and didn’t believe it could be improved upon.
Don’t even get me started on print and distribution costs. You’re looking at double digit CPAs on sales. Margins had to make up for it, which usually meant cutting everything else to the bone and really, really pushing finance options.
An interesting part of this was that when they went online they often really, really, really wanted to replicate the catalogue experience on their websites - page flipping, etc. - took a lot of dissuasion, and in one case where they were particularly obstinate, we went ahead with their desires, with the proviso that they would allow us to build a competing site on more traditional ecommerce lines at no additional cost, with the proviso that we got a cut of sales.
They dropped their catalogues entirely a year into the experiment.
Yeah, but on email it costs you $0.002 to hit a target - catalogues, you’re looking more like $3-$15 depending on scale, catalogue size and quality. Those things cost money.
I sometimes have a look at something but don’t pull the trigger yet, then come back multiple times to look at it again before I buy.
I wonder if that kind of behavior could mean that the real number is a bit higher. For example say 2% of visitors are buying a license but it is counted as 1% because people visiting without buying and then coming back later and buying are counted as different “unique visitors”.
Hard to say as this sort of data is very 'dirty'. Basic analytics will generally take account of returning visitos, but someone might be counted as multiple visitors because they looked at a website on multiple devices.
I used to work for one of the largest tech catalog companies in the US. The largest? Won’t say. Anyway we made about $30 per catalog and we sent 3 a month to millions of people. Our prices ended in 9s but I am not sure there was research behind it, just convention.
I heard there was a second reason for pricing say 9.99 instead of 10.00. It forced the cashier to open the register and ring up the sale to give the 0.01 change, rather than just quietly pocketing the 10.00. No idea how true this is, but it sounds plausible.
It used to be irritating when cash was king but now I use card for 99.9% of everything it doesn't really make much difference to the way I see prices.
Purchased a couple of ice creams at a small museum cafe yesterday and they only took cash... change was 40p (UK here) so I just told them to put it in their donation box, didn't really want a load of coins in my pocket.
It's very unfortunate that this actually works on someone, this means everyone else would have to suffer forever even if it works on 1% of people. I always find those 9-ending prices infuriatingly manipulative. Like you have to actually engage the higher-level thought processes to round them up so they make sense.
Once someone priced something at $300 instead of $299 and his ass fell off.
While they “work” it doesn’t mean people would behave differently if nobody used it ever. People have finite money so over time spending habits end up balancing with incomes by necessity and most people end up spending everything they make over time.
So whatever willingness people have to buy something at 19.99 would likely be reached at 20$ if that was the normal price everywhere.
Let's say that you are pricing products and a competitor is charging $19.99. You know that one cent is not going to change the purchasing decision of potential customers. If it did, you would simply price your product at $19.98 (and maybe get into a price war one penny at a time). Yet you also know that the price ending with a nine will have an impact upon sales. It is not rational, but that's what the statistics appear to say. While it won't have any meaningful impact upon how much money people have to spend, it will have an impact upon where people spend their money.
Sure it’s a prisoner’s dilemma. If everyone charges 20$ then everyone gets to charge 20$ but as soon as someone uses 19.99 everyone is stuck charging 19.99.
It also implies a rather large economic inefficiency where companies don’t charge 13.27$ because people don’t pay enough attention for it to matter.
Mentioned in and being discussed as part of:
People spend more when prices end in .99 (2018)
https://news.ycombinator.com/item?id=40474736