Why the first number in your price is the most essential
This is a principle I refer to as left digit management. And it’s one that I believe can be even more powerful than the power of 9 – a commonly used price psychology method.
In the power of 9 you should always consider using a price that ends in a 9 because it will encourage more conversions. So instead of using £390 or $390 as a price for example you use £389 or $389.
It may only be a pound or dollar difference but the impact of the power of 9 means that more people will buy.
The power of the first digit
Apply a similar principle to the first digit however, and the impact is even more powerful. Say in this instance the price is £400 (or $400). Test it at £399 (or $399) and again – although it’s only a pound or a dollar difference the perception is an even greater difference than the previous example and therefore more clients are likely to convert.
Because of the way we read prices.
In 2005 Thomas and Morwitz published a related study in The Journal of Consumer Research. Penny Wise and Pound Foolish, the Left-Digit Effect in Price Cognition, showed that because we read from left to right we put the most emphasis on the first digit.
So back to the example of 390 and 389. They both start with a 3 so whilst more convert on the lower number we only have the power of 9 coming into play. Take 400 and 399 however and suddenly the difference seems far greater.
It’s still just one dollar or one pound but suddenly we have one price starting with a 4 and one with a 3. And that seems so much lower than before.
It’s powerful stuff. Try it when you create your prices and see what happens.
Find out more about the power of left digit management in your pricing by watching the video.
You can watch the video here.
If price psychology fascinates you as much as it does me, then find out about my online video training programme, The Power of Price Psychology.
In my training program I take you through more than 25 different techniques that you can use to ensure your price seem fairer and get more people saying yes. Click here to find out more.
Wishing you every success on your pricing journey
Chartered Accountant, public speaker and #1 best-selling author of
“Effective Pricing for Accountants”
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