Friday, 22 June 2012

Funny business on the price tag

Have you ever wondered about those strange prices that dominate the retail world? It's not £5, it's £4.99. Forget £10, it is bound to be £9.99. Just occasionally a retailer will rebel. For a brief bizarre period around 10 years ago Asda experimented with pricing CDs and the like with prices that ended with numbers like .74 or .27 - it looked much stranger than you might expect, so engrained is the notion that .99 is what nature intended.

I think there is little doubt that the reason that retailers do this is psychological. We aren't hugely rational when it comes to decisions, especially when they involve those alien things numbers, which didn't exist as concepts when our current brain structure first evolved. So it doesn't matter how much you consciously tell yourself that £10 is pretty much the same as £9.99, your unconscious, shopping-powering mind will see it as considerably less. And it helps if you have to describe your purchase to a penny-pinching other half. 'It was only £9,' you can say, simply not specifying your rounding rule (and who would).

Interestingly, though, a book I'm currently reading for review suggests that the practice of using these trailing .99s predates the awareness of such psychological factors. According to The Universal Machine by Ian Watson, this practice originated with the first cash registers. These were designed to prevent the salespeople ripping off shop owners by clearly registering a transaction and by ringing a bell so the supervisor could see the assistant drop the money into the till.

Apparently the theory was that if you had something priced at £5 then you could be handed a £5 note which you slipped into your pocket and as far as the shop was concerned, the item had been stolen by a shoplifter, while you were £5 better off. But if the item was priced at £4.99 you would almost inevitably have to give change, making it necessary to 'ring up' the item and be under your supervisors scrutiny.

So there you go £4.99? It's surprising how much you get for it.

(The full review of The Universal Machine will be posted on in a few days time.)

Image from Wikipedia

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