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I've always seen the difference between round numbers as being a question of arbitrariness. If the price for a new TV is exactly $1,000 it strikes me as a pric
by sjwright 12y ago
I've always seen the difference between round numbers as being a question of arbitrariness.
If the price for a new TV is exactly $1,000 it strikes me as a price that was arrived at arbitrarily. $999 just gets rounded up in my head. Whereas when I see an amount like $1,012 I feel like -- rightly or wrongly -- that there must be some logic behind the price. That it represents a price set for a reason other than mere marketing.
- Tiksi 12y agoI generally think the same thing, but then assume that they marked it at that price specifically so people would think that. So generally I assume any price is just some sort of marketing unless I can see the actual breakdown of the price.
- josephlord 12y agoIt might well be that it was a target price but there is actually a fair chance that the company may have achieved it by tightening their margins rather than expanding them. Source working for a TV manufacturer and knowing how desperate the sales teams were to get prices to hit certain magic "price points". I'm not saying that it always works this way though.
- mikeash 12y agoEspecially true with things like TVs, where sale prices are often loss leaders with the stores planning to make it up by selling lots of overpriced cables and other accessories to the buyers.
- fluidcruft 12y agoI agree. My explanation is that numbers like "$1,000" and "$999" seem like opening bids--so not only are they arbitrary, they're higher than what the seller is willing to accept. Whereas "$1,012" at least seems like it's already done some negotiating with market forces/demand.
- Igglyboo 12y agoI see this a lot with bidding for government contracts, it's a known trick. There's a sign near me describing the new pipes going into the ground replacing the ditches, it says the contract went to some company for something like $12,345,122 (not sure what the real number is, just an example). I've seen similar numbers on signs at my university describing contracts for new buildings.
- mikeash 12y agoAmusingly, this sort of thing happened with the first measured height of Mount Everest. It was measured at exactly 29,000ft, but they fudged it to 29,002ft so it didn't look like an estimate.
- anulman 12y agoSource: http://www.jstor.org/discover/10.2307/2684102?sid=21105776664453&uid=2&uid=4 http://www.jstor.org/discover/10.2307/2684102?sid=2110577666...
- prostoalex 12y agoThey fudged it only for a small portion of world population that's using body parts lengths instead of metric system to measure things. It's exactly 8.8392 kilometers, seems highly scientific.
- enbrill 12y agoI'm sure they use some crazy equation to come up with that number.
- Tactic 12y agoI never considered this with prices. Interesting. Which is odd because I always consider this with project deadlines. Whenever I see deadlines of the 1st or the end of the month I know it is a date picked out of the air and not based on the actual work required.
- charleslmunger 12y agoWorth mentioning that Costco has a cap of 14% margin on everything except Kirkland brand goods, which are allowed up to a 15% margin. In that case, weird pricing may genuinely be because they can't charge more for it.