Left Digit Effect
First recorded .99 cent purchase: People originally started .99 cents was to ensure that their cashiers were morally incentivized to put the money in the register. As before this there was a high rate of theft…
Official study: You can see the full study if you like.
“Through the cooperation of a direct-mail women’s clothing retailer, we were able to conduct a well-controlled experiment testing the sales effect of using retail prices that end in the digits 99 rather than 00 (e.g., $29.99 rather than $30.00). The results indicated that the use of 99 endings led to increased consumer purchasing.”
Long story short, changing the .00 to a .99 had a dramatic improvement in sales. But not for the reasons they believed…
Definition of Left Digit Effect: a phenomenon in which consumers’ perceptions and evaluations are disproportionately influenced by the left-most digit of the product price
Easier definition: By changing the left most number, people see the price as less than what it would normally be
In this example we see $59.99, which, really means $60. Here the left digit drops from 6 down to 5 creating a illusion that it’s cheaper..
This would NOT Work for $60.99, even though it ends in .99. As $60.99 doesn’t make it feel cheaper, just looks weird
The only thing that matters for this effect to work is the 6 or 5 on the far left
We can see the Left digit effect being used as explained, and on the right we can see how you should not use the left digit effect.
The chart shows the difference in perceived value. And when used correctly, as shown on the left, participants said $2.99 was seem as significantly cheaper than $3.00. When used incorrectly, as shown on the right, participants saw no real difference in the two numbers
The examples above may not be extensive, we believe as a reader of our site you can understand or have seen this many times before.
– Best used during promotions when consumers see the compared prices on the same tag and are more likely to make side-by-side price comparisons
– While there are benefits, we caution managers against blindly applying it. For example, reducing product prices from $3.00 to $2.99 may encourage more purchases, but it also imposes a decrease in the net margin.
Comment below some ideas we may have forgotten
The best number is the most you can charge. With the next being a 0 or 9. And the only difference is if it’s being compared… If compared to another price .99 works best, if not .00 is just fine.