When $9.99 is more than $10
Clark U. researcher shows perception gap in sale pricing
Retailers could be better off charging $100 for sale items than marking those items down to $99.99, according to research conducted by a Clark University professor.
Keith S. Coulter, a professor in Clark's Graduate School of Management, and Robin A. Coulter of the University of Connecticut recently authored a study on the "right digit effect" for the Journal of Consumer Research.
The professors found that the amount of a discount may be less important to consumers than the value of the number furthest to the right in an item's price. That is, when the numbers on the right-hand side of an item's price are small, people perceive a larger discount, the researchers said. An item on sale for $211 from an original price of $222 is thought to be a better deal than an item on sale for $188 from an original price of $199. In both cases, the discount is $11.
The two researchers are the first to identify "a visual distortion effect that may influence how consumers look at sale prices," according to the Journal of Consumer Research.
The researchers also found that the perception distortion holds true when regular prices and sale prices have identical left digits; discounts are thought to be greater when the right-most digit is less than five, the study said.
The research also revealed that what people think of a deal is in part dictated by the way people read, from left to right.
Consumers "focus primarily on the disparate right-most digits in the price comparison process," the researchers explained.
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