8 ms·
Why charging $12/year converts higher than $9.99
- corin_ 16y agoIs the reason that $12 converted better than $9.99 definitely because users are able to visualise it as one dollar a month? Maybe people see the .99 and are trained to think "99 cents is a marketing plan to make me think it's cheaper than it is", thus causing it to have the opposite effect? Maybe people see $9.99 as a generic price, implying it was picked fairly randomly, whereas $12 is a slightly odd number to chose, implying that it was carefully picked as a price that gives users good value? (It would have that effect on me - $9.99 suggests they haven't worked out how much they need to charge me to make a profit, and just picked a rounded number that looks normal.) I'd like to see $12 compared to $14, compared to $11.99, compared to $24, compared to $20.
- callmeed 16y agoExactly–seems a little speculative. Maybe $9.99 would have converted more if they sold it as "That's less than a dollar a month!"
- jcl 16y agoI wonder how it would have done priced at $12 but immediately discounted to $9.99? (Not only is it easy to see how cheap it is, but it's also on sale.)
- brudgers 16y agoMy take - People see one and two and those are the two lowest numerals. Fill their brain up with nines and somewhere there are synapses firing which say that's a lot. It's not like $10 is a huge psychological barrier in the same way $1000 is.
- msuster 16y agoWatch the show. He talked about trying $13.99 and other price points. Nothing converted better than $12.
- buro9 16y agoIn my case, for donations on a forum... nothing converted better than £3 per month. Why? Because it's been translated into "a beer a month", as someone initially said that surely people derived value such that if they met me once a month they'd get a beer in for me... and lo, that's exactly what people started doing online. Prior to this comment I had real trouble pulling in any donations, now people buy the servers and I a beer each month (via £3 donations). And in case anyone is wondering, average price of a pint in the UK is £2.80, and in London where the forum is focused it is £3.30. http://www.pintprice.com/region.php?/United%20Kingdom/ http://www.pintprice.com/region.php?/United%20Kingdom/ My thought on this a while ago: People have to be able to visualise it in a human way to them. They can visualise a pound coin or dollar bill and say, "That's not much", and they can visualise a pint and think "It's the courteous thing to do". They can't visualise 67p very well at all.
- jarek 16y agoSorry, haven't watched the show - has he tried $10, rounded off?
- imcqueen 16y agoAnd do you think $12 converts better than $12.00? It sounds minor but I bet it makes a difference. In my experience we typically do round dollar amounts and drop the ".00", but maybe that helps explain why 9.99 loses to 12. How would 10 vs 12 do?
- jayliew 16y agoReminds me of this: http://www.inc.com/guides/201101/guide-to-the-ABCs-of-pricing.html http://www.inc.com/guides/201101/guide-to-the-ABCs-of-pricin...
- zmmmmm 16y agoMy guess: it's more of a "don't make me think" type thing. Can you divide 9.99 by 12 in your head? How long would it take? How sure would you be of the answer after 1, 2, 3 ... 5 seconds? In that impulsive fraction of a second that you have the user about to click the button and they are battling within themselves if they can do the calculation then it increases the chances that the "buy" side will win. Being able to do the calculation easily probably also gives a reflection of friendliness and ease onto the entire rest of the service as well.
- corin_ 16y agoWell personally it would take me a couple of seconds to get to "roughly 85c/month", but I wouldn't actually be thinking that when deciding to signup. However, if I did care about how much $9.99/year is each month, rather than even trying to be slightly accurate, I'd round it off as "less than a dollar a month" and go straight ahead. That extra 17c/month doesn't make a difference to me. (Obviously both my calculations speed and the amount I care about price differences when talking about that amount of money isn't neccesarily equal to that of other, possibly most other, potential customers.)
- nikster 16y agoMaybe they introduced this new price with a tagline - "A buck a month!". I am pretty sure it's because of that, very simple, people like simple. I like simple.
- jonathanjaeger 16y agoYes, if you watch the episode of This Week in Venture Capital, that is what the JibJab guy said.
- revorad 16y agoWhen I see $9.99, I think $10, not "99 cents is a marketing plan to make me think it's cheaper than it is".
- Seth_Kriticos 16y agoMy guess is, that it's exploiting the basic synaptic nature of the brain. The 12 numeral automatically kicks in the association with months, which in turn splits the sum to 12 x $1, or one dollar a month which seems low enough to feel at ease with. Seems to be intuitive enough to happen subconsciously. The other price points just appear as one fixed sum in the mind, which is much less likely to be spent on a whim.
- rythie 16y agoI don't like prices like $9.99 first I have to round up to $10 and then I haven't actually seen that price next to the item. When someone quotes the price verbally $9.99 it's longer than $10, so sounds bigger. Also, $9.99 sounds like they are embarrassed that it's that much and they have to trick you into paying more than you thought you were.
- cilantro 16y agoI wonder if anyone has data on the broader question of whether numbers that are easily divisible perform better than prime or hard to divide numbers?
- aresant 16y agoGreat headline, converted me. Price elasticity testing is so crucially important and I consume everything I can find about rationality vs. the seeming randomness (particuarlly for digital products). Even this single morsel tying rationality of consumer mind-set of $1 per month is interesting.
- mixmax 16y agoI wrote a blogpost about price elasticity a long time ago that you might find interesting:http://www.maximise.dk/blog/2009/01/getting-product-pricing-right.html http://www.maximise.dk/blog/2009/01/getting-product-pricing-...
- zizee 16y agoAgreed, the headline was great. If you like articles about pricing, I read a really good one last night: http://onstartups.com/tabid/3339/bid/37737/Secrets-Of-Freemium-Pricing-Make-The-Cheapskates-Pay.aspx http://onstartups.com/tabid/3339/bid/37737/Secrets-Of-Freemi... Care to share any good articles you have read recently?
- zizee 16y agoThere is also a good ebook from Neil Davidson, that provide a nice overview of how to price software. It's short and easy to read: http://www.neildavidson.com/dontjustrollthedice.html http://www.neildavidson.com/dontjustrollthedice.html
- keiferski 16y agoDirect link to the interview: http://thisweekin.com/thisweekin-venture-capital/this-week-in-venture-capital-35-with-gregg-spiridellis-founder-and-ceo-of-jibjab/ http://thisweekin.com/thisweekin-venture-capital/this-week-i...
- linuxhansl 16y agoSpeaking from personal preference: I always prefer "honest" numbers like $1, $10, $12, $60, etc, rather than marketing number such as $0.99, $9.99, or even $55.59 (they seem sleazy and to an extent insulting - as if I cannot work out that $9.99 is almost identical to $10).
- adityakothadiya 16y agoI wish Apple allows developers to decide their exact price instead of price-tiers which are variations of $*.99. I wanted to pick honest pricing for my iPhone app's in-app purchasing plans, but you've no option than to choose these marketing numbers.
- Waywocket 16y agoSo does almost everyone, when asked. The depressing thing is, when it comes to actual results, the x.99 pricing still works (well, I read this on the BBC a couple of months ago - don't have the link but the study they were quoting sounded pretty convincing).
- v21 16y agoThe £.99 pricing also makes people in shops operate the till every time to make change, preventing theft.
- anamax 16y ago> The £.99 pricing also makes people in shops operate the till every time to make change, preventing theft. In most US states, the listed price isn't the amount that the customer actually pays. In most retail establishments, sales tax isn't included. In most online sales, there's some shipping and handling fee. As a result, even a "round number" price ends up being something like $12.31.
- wazoox 16y agoAFAIL this is a very specific (and weird) US idiosyncrasy. In all other countries I can remember, you pay the price displayed.
- thomaspaine 16y agoWhat's the best way to test out different pricing plans without pissing off your users? Seems hard to a/b test because if anyone is actually talking about your company, people are going to be confused that the landing page tells them $10 when all their friends and blog posts say $8.
- jdludlow 16y agoThere was an interesting HN story a week ago that covered A/B price testing. http://news.ycombinator.com/item?id=2143554 http://news.ycombinator.com/item?id=2143554
- zizee 16y agoThey can get confused for sure, and pissed: http://news.cnet.com/2100-1017-245631.html http://news.cnet.com/2100-1017-245631.html One suggestion is to have your pricing page show a random price, but after the user clicks "yes please" you tell them immediately that "actually, we are having a discount today to $8", telling them the lowest price of the bunch. The danger with this is that if people find out about it, it could taint your test as they know that the displayed price is not the price they will be charged at the end. I'd be interested to hear if people have any other good ways to tackle this. The only things I can think of ad extra variables to the equation (tainting the a/b test) e.g.: write "limited time offer" next to the cheaper prices, or run the different prices on different days.
- neovive 16y agoDo you think the same would hold true for an annual pricing model? For example, moving from $999/year to $1,000 or $1,200 per year.
- jdludlow 16y ago$12/year is an annual pricing model. It's also a small enough number to be an impulse purchase. At $1000, people are going to stop and think longer about it, so it might not have the same effect. (I would still prefer $1000 to $999.99 though.)
- zaidf 16y agoIn one of my landing pages for a product, I showed a Starbucks cup with its price. And next to it I showed my service's price--less than the price of one visit to Starbucks. I had a similar idea: help people establish a frame of reference. Alas, I got too busy to actually go live with it.
- reedF211 16y agoI was interested in the article until I realized they were promoting a Jason Calacanis product and I just about threw up in my mouth.
- vegai 16y agoEvery time I see a price like $x.99, I have to wonder if the salesperson thinks I'm an idiot.
- JoeAltmaier 16y agoWhatever the reason, its definitely psychological. Nobody cares about a few dollars a year - these same people are buying Cocoa Crispies at $6/box every week.
- parfe 16y agoI read the headline as $12/year then hit $9.99 and assumed it was per month had to go back and reread $12/year.
- rexreed 16y agoHow does this line of thinking apply to monthly subscription fees? Does $12 a month have the same higher conversion rate compared to $9.99 a month as $12 a year does to 9.99 a year?