Ariyh’s Pricing Playbook 📘 (+ When to use 0.99 prices)
It’s the day! Ariyh’s Science-based Playbook of Pricing & Promotions is here. Today’s insight is a special extract from the Playbook: When to use just-below pricing ($.99 endings).
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📘 Ariyh’s Playbook of Pricing & Promotions
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Below - for today’s insight - is a special extract from the Playbook. It’s a combination of several recent studies to answer the question: When should you really use just-below (99-ending) prices?
(If you pre-ordered the Playbook, you should already have received an email with it. You can also find it in your Gumroad library).
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P.P.S.: Congrats to the 3 people who won a copy of the playbook for answering the survey back in February. I’ve already emailed you individually :)
Playbook extract: Optimizing the digits of your price
Should your price be rounded ($220), just-below ($199), or precise ($223.52)?
In this sample of the playbook, we’ll take a look at when you should use one of the 3 possible cases (the playbook has all 3, of course).
The latest evidence shows that just-below prices (e.g. $9.99) aren’t always the right choice.
💡 What it is
Just-below prices use amounts that are below, but close to, a rounded number.
For example, $2.99 vs $3.00, $297 vs $300, or $4,950 vs $5,000
🧠 How it works
Because of the left-digit bias effect, people focus more on the first digit than the last ones.
The left-digit of the amount should go down for it to be effective (the difference between $1.99 vs $3.00 feels much bigger than $2.00 vs $2.99, although it’s only $0.02 different).
The price discount seems larger when the left digit is small (e.g. 1 or 4 vs 7).
📈 What it does
Signals good value.
Associated with lower quality.
Harder to mentally process and remember.
✅ Use it when
Running a price promotion (e.g. was $55, now $39.99)
Price is the focus in the buying decision, rather than quality
You want to cultivate a low price brand image
Your price is low and the purchase is low risk (e.g. groceries)
❗ Special cases
If prices are 4 figures or more, common for many non-US Dollar $ or Euro € currencies (e.g. Indian Rupee ₹, Japanese Yen ¥, Turkish Lira ₺), repeating the last 3 digits overrides the just-below effect (e.g. $3,222). Instead, repeat the last 3 digits with a number below 5 (ideally 1) to give a feeling of better value. For example, use ¥2,111 instead of ¥1,999.
Don’t use it when you want customers to upgrade to a more expensive option (try to keep the two prices on the same left-digit level, e.g. $40.50 vs $48.50 for the upgrade).
Freemium language learning app (e.g. Duolingo)
Context: Trying to encourage free version users to upgrade to the premium version.
Recommended pricing: Just-below pricing (e.g. $4.99 / month).
Why: Users have already experienced the app’s quality so signaling value is more important to encourage the leap.
Context: In a retailer with a brand focused on value (e.g. Walmart)
Recommended pricing: Low last 3-digits (e.g. $1,222)
Why: For prices of 4 figures or more, repeating a low number in the last 3 digits shows more value than just-below pricing
Premium brand shoes (e.g. Nike)
Special Black Friday discounted price
Recommended pricing: Just-below (e.g. $79.99)
Why: The price promotion overrides the need to signal quality and premiumness through a rounded price
Remember: These are recent scientific discoveries. In the future they will probably be better understood and could even be proven wrong (that’s how science works). They may also not be generalizable to your situation. Test risky changes on a small scale before rolling them out widely.
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