The Idea Hunter's blog

Thoughts on better thinking and better presenting

Precise pricing

A recent report looked at how the opening price within an auction impacts on subsequent bids. It suggests that a rounded figure (£200) implies a lack of precision in the pricing and that a buyer is more willing to move away from this figure in bigger increments than if a precise figure is used (£198.50). Or indeed £202.50 if you're a real businessman. The precise figure seems to be more believable as a "value anchor" for the item. Obviously, in the high street retail environment we don't (normally) try to negotiate a new price but there are lessons to be learnt when, for example, submitting a proposal/quote. A specific, precise figure will reduce the likelihood and extent of any negotiating down in the price.

I've always thought that the £9.99 type pricing so popular in shops was a legacy of the old cash-till days where owners chose those prices to reduce the opportunity for theft by shop assistants. Theory being that in order to give change to the buyer the till would have to be opened and correct figures inputted. If it was £10 the assistant could not input the money and the customer would be unaware and indeed unconcerned at what had occurred.

Nothing like being able to trust your employees!