Ohio State study shows 99-cent pricing trick may backfire on retailers

Ohio

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COLUMBUS (WCMH) — A study conducted by researchers at Ohio State University takes on the retail pricing trick of setting a price just below a round number — for instance, $39.99 instead of $40.

Although the 99-cent price point may lead consumers into thinking the product is less expensive than it really is, researchers found that “just-below” pricing makes consumers less likely to upgrade to a more expensive version of the product or service.

“Going from $19.99 to $25 may seem like it will cost more than going from $20 to $26, even though it is actually less,” said Junha Kim, doctoral student and lead author of the study. “Crossing that round number threshold makes a big difference for consumers.”

The results were obtained from seven different experiments on a variety of products, including coffee, facemasks, streaming services, cars, and apartments, according to OSU.

The study, “The Threshold-Crossing Effect: Just-Below Pricing Discourages Consumers to Upgrade,” was published Thursday in the Journal of Consumer Research.

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