How Big Is That Discount? The Last Digit Determines Consumers' Perception Of The Deal

According to a study published in the Journal of Consumer Research the last digit of a product’s price determines your perception of how much the item has been discounted.

If the price ends in a lower number (less than 5) you feel like you got a better deal.

From Science Daily:

The researchers show that “right-digit effect” influences consumer perception of sale prices. When the right digits are small, people perceive the discount to be larger than when the right digits are large. In other words, an item on sale for $211 from the original price of $222 is thought to be a better deal than an item on sale for $188 from an original price of $199, even though both discounts are $11.

In addition, the researchers find that when consumers view regular and sale prices with identical left digits, they perceive larger price discounts when the right digits are “small” — less than 5 — than when they are “large,” or, greater than 5.

“When consumers examine multi-digit regular and sale prices in an advertisement, they read those prices from left-to-right. If the left (hundreds) digits are identical, consumers will pay less attention to those digits, and instead will focus primarily upon the disparate right-most (tens and units) digits in the price comparison process.,” the authors explain.

“Our findings indicate that comparative price advertising can distort consumers’ perceptions in ways unintended by the seller.”

Thankfully, consumers can easily avoid this effect by actually doing the math. Don’t guess, calculate.

Sales Prices: How Right Digits Affect Perception of Discounts
[Science Daily via boingboing]