Take the 2-minute tour ×
User Experience Stack Exchange is a question and answer site for user experience researchers and experts. It's 100% free, no registration required.

I need to build pricing plan for service that will be used mainly by developers and designers. I can't decide what price to use, e.g. $20 or $19.

I'm afraid that well-educated and smart people (target audience) will take prices like $99 as meaning I want to play with their psychology and deceive them.

Maybe I should be honest and write a simple $100?

What do you think?

share|improve this question
    
even high ticket software costs 4499$ etc, so I would say, you won't have a problem, people are used to this. –  user1721135 Apr 20 '13 at 9:16
1  
As a costumer, I'd say I rather see a $100 than $99. Besides, the ammount of new costumers you would get by using that kind of mind cheats are negligible –  fedeetz May 4 '13 at 17:58
    
$99 - "he wants to charge me $100, but make me believe it's not $100" $100 - "100? He just came up with some random number, it's probably over priced" $93 - "Hmmm, that seems like a very exact number, I bet they are marking up %15, well it is only fair they make a profit" –  TruthOf42 2 hours ago
add comment

4 Answers

up vote 8 down vote accepted

Pricing is an important marketing tool and well understood by science in the late 80. Supermarkets were the driver for this research. Shoping at stores is sooo incredible designed, you wouldn't believe it, if they tell you everything they do. If you search for pricing strategies online, you will find a lot of resources at universities of economy.

I've read a good and entertaining article about some basic pricing concepts at Joel Spolsky's blog. In the end he says, that you should charge only 0,99 for software unless its a bug tracker software ;)

Then, there have been an article series at UxMatters about Decision Architecture covering pricing as well and goes into psychogical details like anchoring effects,etc

A good summary of price effects at ConversionXL Pricing Experiments You Might Not Know, But Can Learn From. This one is the article you should read, because here they discuss topics like 0,99 or 1 dollar. Even how big the $-sign should be.

This is more about choice sets, which you might be interested in, if you have different price plans:

To answer your question: I can't understand why you think well educated people will feel affected by the price? I bet they will not even recognise it. And if so they wouldn't care.

First of all they look if your software will solve their specific needs. Next will probably be the reliability of your company and the probability of support. And the last is the price, unless you have a commodity software.

So, I would use some tricks for encourage them to buy your software. For me it isn't a dark pattern as tagged here, because the customers decision is made by features and company's reputation not by the price.

If you lie or make it look better regards the reputation (our customers are...) or features (feature only available first month...), that would be a dark pattern for me.

share|improve this answer
add comment

Pricing strategy is not universal, and what may work on one site might not on another. You really have to do some A/B price testing, and see what works. However, I would always give the person that chose to buy at a higher price, whichever the lower price is. It will save you a lot of animosity if you do that.


That said, I read a study that was part of a paid marketing program that stated that price points ending in 7s and 2s were most effective in online sales. They had done a fair amount of A/B testing on different sites, and these were the numbers that came out on top. It didn't include very high numbers, with the highest tested being about $400 if I recall.

The theory to explain it was that people tend to think more easily in terms of 5s, and mentally round off to there. So when a price is $17, people tend to think of it as $15, and when it is $22, they tend to think of it as $20. I'm not supporting this (as I haven't seen data myself on it), but this was what was proposed.

share|improve this answer
    
Sounds interesting. What's your source? –  seriousdev Apr 20 '13 at 19:03
    
@seriousdev The source was data give on a paid (non public) marketing course. I'm not advocating what it said, just passing on what was in it. I advocate testing as the best way to know. –  JohnGB Apr 20 '13 at 19:07
add comment

Prices like 0.99 or 99 have softening effect and are received better by customers in general. When choosing between $100 VS $99, a good question would be the difference between the values which is $1 but one is 3 digits number and other is 2 digits. Once you jump from 2 digits to 3, 100, 101 and 102 like prices are still perceived as 100.

I am personally interested in pricing patterns and which patterns are more successful than the other. My feeling is that prices which have two double numbers are taken better than the ones that have varying digits. For example 11.22 would be more acceptable than 11.21 or 11.23. It could be because our mind accepts such patterns more easily.

share|improve this answer
add comment

If you're asking opinion; I would say go with the standard, 99.99 rule. However, if you really feel your audience requires something different go with that.

Though, saying that the psychological side of this is very interesting and is buried deeper than you might realise, further than that of the tilt of 'well-educated' people that you mentioned.

It's been a while since reading up on this but true, tried and tested methods are often fruitful in their returns for good reason.

share|improve this answer
add comment

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.