Whether you’re a math whiz or simply horrible at math, we can all do addition and subtraction, and simply rounding, right? According to our purchasing patterns, we can’t. In our defense, shopping does not follow the logic of basic math.
Psychological pricing is based on the idea that certain prices have an impact on consumer purchasing habits. A notorious pricing tactic involves the number 9, usually in the form of $-.99. Although only a cent away from the next whole number, when $-.99 is attached to it, people have a tendency to round it down to the next lowest monetary unit, which is mathematically incorrect, but it happens subconsciously.
For example, a jar of olives priced at $4.99 would be thought of as $4 rather than $5.
Another factor that contributes to this phenomenon stems from a person's tendency to read numbers from the left to right. This is associated with “left-digit effect anchoring,” which means that the first number that we read becomes encoded into our minds before we get a chance to get through the rest of the numbers.
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