Charge High Prices With 95-Endings

Should prices end with 99 or 95?

It depends on the base price. Customers preferred:

• $3.99 and $6.99 for cheap items (e.g., cheese)
• $49.95 for expensive items (e.g., kettle)

(Gendall, 1998; Schindler, 2006).

Researchers are unsure why this happens, but I have a hunch. The size of the price doesn't matter. What matters is the expected price.

I confirmed this effect in a pilot study.

I asked people to imagine buying flip flops, and I adjusted the expected and final price. The interaction was significant:

• $18.99 was preferred when expecting $25
• $18.95 was preferred when expecting $12

Why It Works

Suppose that you expect to pay $12 for flip flops.

Then you see $18.95. How does it feel?

Well, you evaluate this price by starting at $12, then traveling upward. Even though $18.95 is higher than you expected, it stopped early. It could be higher.

But $18.99 is pushed to the highest threshold in this bracket. So it feels more painful.

Conversely, an expected price of $25 will result in downward motion. Now $18.99 feels good because it pushed through a numerical boundary, while $18.95 feels like it has wiggle room to move even lower.

For simplicity:

• End in 99 for low prices
• End in 95 for high prices

But ultimately, the choice between 99 vs. 95 depends on the expected price and whether customers are traveling upward or downward to reach your actual price.

7-Ending Prices?

I always get asked about 7-endings (e.g., $97, $29.97).

Some marketers swear by them, but I haven't seen any concrete data that shows they're effective. If anything, 7-endings might be less effective because 7 is the only digit with more than one syllable (see Coulter et al., 2012).

For now, my rule of thumb: Since a 7-ending is slightly more unusual, it will push more attention on the price. So if your price is a good deal, a 7-ending could be persuasive. But if your price is considered expensive, choose 95 to avoid pushing more attention on the price than necessary.

• Coulter, K. S., Choi, P., & Monroe, K. B. (2012). Comma N'cents in pricing: The effects of auditory representation encoding on price magnitude perceptions. Journal of Consumer Psychology, 22(3), 395-407.
• Gendall, P. (1998). Estimating the effect of odd pricing. Journal of Product & Brand Management, 7(5), 421-432.
• Schindler, R. M. (2006). The 99 price ending as a signal of a low-price appeal. Journal of Retailing, 82(1), 71-77.