24 October, 2016 - 15:55 (Research Matters)
Have you ever noticed that the price tag of daily consumables always comes with a 9 at its end - Like jeans with a price tag of Rs. 999 or mobiles with Rs. 4999? Instead of using 1000 or 5000, the merchants always prefer to choose these prices ending with a 9. Not only in shopping malls, but shops in your locality also use this same tactics to draw your attention.
To know the origin of these ‘9 ending digit’ pricing, we need to go back a long way in time. It was around 1875, when Melville E. Stone established the Chicago Daily News newspaper in London. It was not going well initially. So instead of using 1$, he used 99 cents as the price of his paper and – bingo, the rest is history! Daily Mail became one of the most successful newspapers after that.
Researchers from the University of Chicago set up an interesting experiment with these 9 ending products. They selected a range of clothes priced at $39 each and tagged half of them with a price tag of $34 and the rest with $39. Surprisingly, they noticed that clothes with higher price ($39) had a higher demand. A researcher from New York University, Monoj Thomas, found that people love to buy pens with a price tag of $2.99 instead of $3 but the same people chose pens worth $2.60 instead of price $2.59.
The result of two experiments seems contradictory, but Dr. Thomas proposed a brilliant explanation. He proposed 9 ending digit pricing would work only when the left most digit changes (here 2 to 3). Psychologists say that we normally read from left to right and as the time to read these numbers are very short, unconsciously, the left most digit effects us the most. So it seems the price of the jeans is not Rs. 999 but Rs. 900.
The 9 ending digit pricing will not work when you are purchasing something very expensive like a car or an old painting. During this, you won’t compromise with the quality. But in the case of one’s daily shopping, we need to be very careful about prices ending with a 9.