$19.99

Have you ever wondered why the Rounding Laws introduced when 1 and 2 cent coins went out of circulation in 1995 have never been changed?

Well here is the answer to the question. 

We couldn't be arsed to complain about false advertising. €19.99 and €19.98 and €19.97 are actually €20 the reason they are priced at €19.99 on the shelf or on petrol pump prices is to do with psychology and its quite interesting to read about. 

When people are buying based on their feelings (e.g. hedonic products such as food and fashion, a spa experience), use round prices (e.g. €15, $200).

When people are buying for rational reasons (e.g. utilitarian products such as a washing machine, business services), use non-rounded prices (e.g. €15.95, $229.50).

Your customers will have higher preferences for your product and will be more likely to buy.

It works this way because 

1.Rounded numbers are more frequent in our life, so we find them easier to mentally process - which increases how likely we are to use our feelings. 

2.Non-rounded numbers are harder to process but feel more rational - as if they are more grounded in facts.

3.When the price matches our state or emotional vs rational, our judgment about the product “feels right”. 

4. In turn, this intensifies our judgment of the product (i.e. good becomes great, bad becomes terrible).

Psychology is used throughout our lives by marketers, in the supermarket layout to colours in brands and all sorts and it is also used in propaganda with reciting data over and over and over until we believe there is no question about the propaganda being truth and just take it as read. 

Al Gore's Inconvenient Truth is a good example, his movie is a 2006 American documentary about his campaign to educate people about global warming. The film features a slide show that, by Gore's own estimate, he has presented over 1,000 times to audiences worldwide. His movie has been used in School syllabus and the claims he made were taken as a crisis bound to happen.  

The crisis never happened, but he is still preaching global disasters today because if you say something enough times it has to be true. 

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