Why Things Cost $19.95


The Scientific American has a very interesting article about why stores label items as, say, $19.95 instead of simply $20. You probably think it’s simply to make the item appear cheaper and that you’re not fooled by this trick. Turns out there’s more to it than that.

Click here to read the interesting article at the Scientific American.

Or if you’re too lazy to read the article, here’s the paragraph that sums it up:

As Janiszewski and Uy explain in the February issue of Psychological Science, people appear to create mental measuring sticks that run in increments away from any opening bid, and the size of the increments depends on the opening bid. That is, if we see a $20 toaster, we might wonder whether it is worth $19 or $18 or $21; we are thinking in round numbers. But if the starting point is $19.95, the mental measuring stick would look different. We might still think it is wrongly priced, but in our minds we are thinking about nickels and dimes instead of dollars, so a fair comeback might be $19.75 or $19.50.


9 responses to “Why Things Cost $19.95”

  1. Khristopher says:

    That doesn’t really make much sense to me. I’m going to go with what I really think, and that is simply to make the item appear cheaper.

  2. Boo Radley says:

    I think it does make sense… if something’s $19.95 you’ll be satisfied if you get a discount that makes it $19.50. But if something’s $20 when you think of a discount you’ll think $19 or $18. At least that’s how my brain thinks 😉

  3. sally says:

    If your my husband and see something at 19.95, you automatically think im gonna get this its only 19 bucks.

    As where I think, its 20.

    hahah

  4. Alex says:

    Very interesting. Companies know a lot more about us than we know about ourselves.

    Another interesting interview by Jon Lehman who worked for Wal-Mart for 17 years, managing six stores in four different states explains Walmarts Opening Price Point strategy under the heading … What is the opening price point? Why is it so key to Wal-Mart’s strategy?
    Hope you enjoy the being in the know!

    http://www.pbs.org/wgbh/pages/frontline/shows/walmart/interviews/lehman.html

  5. frugiedh says:

    omg…Sally. bad news. We are apparently married to the same man.LOL But maybe not because if my husband says that something costs $90, then it usually means the actual cost was $99. He really rounds things down. $499 to 400, etc.

  6. Sabrina says:

    Wow…I ready the Walmart article. The original issue of pricing at 19.95 to make us think in terms of pennies instead of dollars is one thing…what Walmart is effectively doing is tricking the consumer. He basically said it. In putting a cheaper price on a piece in the forefront, the customer will deduce that all the prices will be lower then the competition. They are not, in fact, and in many cases don’t have to be because WalMart will just make it appear that way to get people in the door. I don’t shop there often, but now I’m thinking I’m going to stop all together…

  7. Alex says:

    Sabrina

    Another interesting point about Walmart.
    They will not let people write down their prices.
    They will kick you out. Other retailers have to go in with hidden recorders or pretend they are talking on cell phones.
    Walmart doesn’t want a comparison of prices.
    There was an article in the National Post that stated that other than feature items (opening price point strategy items) the prices were not better. Sometimes they were worse.
    It is good to be an informed consumer.

    Take care
    Alex

  8. Alex says:

    Feet Scarred From “Chemical Flip Flops,” Walmart Still Not Talking

    It’s been about a year since Kelly Stiles’ feet were (somehow) injured by a $3 pair of Walmart flip flops. In that time, Kelly says her feet haven’t fully healed and she still can’t wear sandals or flip flops. She says she still has pain where she was injured.

    Walmart is saying nothing at all, although Stiles says that of the 200-350 people who contacted her after she posted photos of her “burns” on the internet, a few have “settled with Walmart for undisclosed amounts.” The retailer has pulled the flip flops in question from store shelves, but they do still sell shoes from “chemical flip flop” manufacturer.

    To read this article click below:

    http://consumerist.com/5008028/1-year-later-feet-scarred-from-chemical-flip-flops-walmart-still-not-talking

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