The Left Digit Effect

The power of 99 cents and more specifically 9, has been around for decades. From 99 cent songs to 99 cent stores, the power of this pricing strategy is still thriving today. The question is why does it work? It all begins with how we process numbers.

When people are interpreting prices, they begin by defining the order of magnitude for any given value. Generally, humans aren’t the best at thinking of things in absolutes, so we rely on comparison to do the job for us. So when we compare $4.00 to $5.00, we easily recognize the difference between the two, 4 vs 5.

This works great in the example above, but what happens when you compare $4.99 to $5.00? Again we recognize that $4.99 is less, but we perceive it to be much less, because we rapidly interpret its value based on the first digits, 4 vs 5 again.

Under consideration Suggested by: jonas Upvoted: 02 Feb Comments: 0

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