Perhaps the most peculiar, mystical, odd piece of the marketing game is pricing.
On the surface, such stuff seems easy enough. Cheap? Good. Super-expensive? Hmmm. Maybe not so good. When the “Air Zoo,” a flight and aviation museum in Michigan, wanted to boost attendance last year, it lowered the admission price to zero. Attendance doubled over 2008. Who would have thought?
To be sure, the “marginal value” issue can come into play. I tend to drink more beer during bar “Happy Hour” than other times, because the beer is so cheap and I’m easing the pain of a life lost to newspaper work. But, by the time I’m on my eighth beer, the marginal value of the next beer has been considerably diminished.
Lower prices alone don’t explain marketing magic. Some research suggests that we are inclined to choose and enjoy more expensive wine, even if it is less tasty than a cheaper alternative – or, we prefer wine that we have been told is expensive, even if some sneaky academic researcher has poured it from a cardboard carton.
The marketing gurus have stumbled upon and used most effectively the allure of weird pricing designed to make us insane with desire.
A Cornell University study this year in the journal Marketing Science found that consumers comparing two similar prices are easily confused by “rounded” prices (more zeroes) – and perceive it to be higher, even when it’s lower.
A Novel Idea
These kinds of numbers tricks work for issues other than pricing, as well. When the Boston Public Library system in February constructed its emotional whine about potential budget cuts, the threat was that 10 neighborhood branches might be closed. See? Just like the Cornell guys said. If the library officials had threatened six branches, or eight branches, we would not have been as terrified as we were when they came up with a number than ended in a zero.
The number nine can perform valuable service, as well. As author William Poundstone explained last year in his book, “Priceless,” there is no “correct” price for most products and services – which is one reason why odd prices that end in a nine tend to be rounded down by consumers, rather than up.
In a 2008 book, “Predictably Irrational,” MIT math professor Dan Ariely had great fun describing experiments that pointed out our mental illness when it comes to making decisions and how prices influence us in strange and nonsensical ways.
Consider the marketing magic that must go into the pricing of higher education – an opaque hodgepodge of actual costs and government subsidy and a dose of how much the market will bear.
At Penn State, the combined tuition and mandatory fees for both in-state students and out-of-stare students ends in the number “six.” At the University of Connecticut, again, the tuition-fee package for both in-state and out-of-state ends in a “six.” At the University of Rhode Island, the magic number for out-of-state students ends in a “six.”
What black magic is this? Is it a cult thing – or marketing research?
At the universities of Vermont, Massachusetts and New Hampshire, the in-state tuition and fee totals for each school ends in either the digits 2-4, 4-3 or 3-2. “Two, three, four, who do we adore? New England schools, New England schools, yea!”
By the way, the out-of-state tuition and fees at UMass are $19,955 – which is sort of like $20,000, but different.
Of course, none of this is any mystery to real estate professionals, who attend secret classes in underground bunkers to learn of the mysteries of pricing real estate property in such a way as to dazzle buyers with ones and zeroes and nines and stuff.
It was just a week or so ago in Banker & Tradesman when two lovely homes in southern New Hampshire were offered up at dazzling prices. Both of the prices ended in “900.” Aha! The magic of the rounding and the magic of the “nine.”
I’m going to end this column now. Banker & Tradesman pays me at a rate that ends in a nine, instead of a zero. They’re playing games with me, aren’t they?
