Direct evidence of ending-digit drop-off in price information processing

Abstract

Research has suggested that pricing products at one cent below a whole number (e.g., $4.99 instead of $5.00) can be an effective method for increasing purchases. Although many reasons for this have been suggested, a commonly proposed explanation is that consumers tend to drop off, or pay less attention to, the rightmost two digits. This drop-off mechanism has garnered much indirect support, but only limited research has been conducted to directly test it. In this study, respondents provided estimates of how many products they could purchase for $73. Analyses indicated that respondents thought they could buy significantly more products priced with 99 endings than products with comparable 00-ending prices. Follow-up analyses showed that (a) errors made by respondents showed a pattern consistent with a dropoff mechanism, and (b) motivation to carefully provide quantity estimates moderated the effect. The study therefore provides rare direct evidence that the drop-off mechanism may contribute to the effectiveness of 9-ending pricing. © 2005 Wiley Periodicals, Inc.