MIT Study on Prices Ending with $9

By Daniel Scocco

Did you know that around 60% of all retail prices end with a 9 digit? No one is sure about why the digit 9 in specific, but most marketers and economists know that ending a price with it tends to increase sales.

For those who want empirical evidence, back in 2003 some MIT folks did a quite interesting study around the subject. The basically used a mail-order company that sells women’s clothing, and the priced the same pieces at three different levels: $34, $39 and $44. Care to guess the results?

The $39 price tag outsold the other, by a factor of 15% up to 30% in some cases. If you didn’t get the insight yet, let me re-phrase it: the same product sold more units with a price of $39 then with a price of $34!

The same results were found when they used $44, $49 and $54 price levels, as well as $54, $59 and $54. In other words, the price tag ending with a 9 virtually always outperformed the other price tags, were they higher or smaller.

Here’s the conclusion from the paper:

We have presented three ?eld experiments demonstrating that $9 price endings increase demand but that the effect is context dependent. The effect is stronger for new items that customers have seen less frequently in the past.

Pretty interesting huh? Here’s the link to the PDF if you want to read it in full.




Share

7 Responses to “MIT Study on Prices Ending with $9”

  • Small Biz Web Center

    It’s obviously something psychological, but what exactly? Is it because the 9 is less than a two digit 10?

  • Shyam Chathuranga

    Great post, I was looking for this. I received another email piece from Daniel’s newsletter which includes similar thing like above. Many people use 7 ending price tags.

    What you think about $47, $97, $197 etc?

  • Shawn Gossman

    Interesting post, Daniel! Over in my parts, you will get a lot of “$9.99” or “9.95” price tags. I’m not a big sale expert so I always wonder why they do that. And the tax is going to make it more than that, so really, why not just put the full price (tax included)?

  • Justine Moore

    I agree that it’s definitely psychological. I would love to see future studies on this and what they think the exact reasoning actually is.

  • amna

    Just mind satisfaction. people cannot think just satisfied their that 9 is less than 10.

  • Ryan @ Digital Photography Hobbyist

    Really useful information for pricing products. It makes sense since almost every retail store does this, but it’s neat to see actual data to back it up.

  • Raspal Seni

    Hi Daniel,

    I wrote my views and perspective about why the number 9 is used in sales, on my blog post today:

    http://raspalwrites.com/60-percent-prices-end-with-9/

    Regards,
    Raspal

Comments are closed.