Why San Francisco Companies Should End Prices in 49
A reader/colleague recently sent in a research paper that is fascinating, but probably not that impactful. Markus Husemann-Kopetzky and Soren Kocer wrote Price Endings that Matter: A Conceptual Replication of Implicit Egotism in Pricing. Doesn’t that title just grab you and make you want to read it? 🙂
The researchers did their research in Europe using teams I’ve never heard of that play a sport I barely understand. (Apologies to you soccer fans out there.) So, I’m going to pretend they did the study in San Francisco where the 49ers are a beloved NFL team.
What they found was fascinating. Sports fans where a team name is a number, like the 49ers, have an affinity for that specific number. The research showed that 49er fans would rather buy something with a price that ends in 49 than a price 1 or 10 cents lower. Pretty interesting. Of course, non-49er fans don’t have that preference.
This means if you are selling products to 49er fans, you should consider ending your prices with 49 cents or 49 dollars. It’s surprising that people really are this irrational.
The authors didn’t quantify the size of the effect. I wonder if lowering a price from say 7.99 to 7.49 would result in enough more sales to justify the price decrease. Or, would an increase from 7.99 to 8.49 sell just as many or just slightly fewer units to make the price change more profitable?
Regardless, you have to admit this one is weird and fun. Thanks for reaching out Markus.
FYI: The actual study used teams called Schalke 04 and BVB 09 so the price points they tested ended in .04 and .09.