When I find myself comparison shopping, price is usually the first item I compare. It makes sense since this is usually the first “comparable” item I can quickly examine anyway. But I need to be careful. I’m human and I tend to make a decision between lower and higher cost items based on the first digit I see – the leftmost digit, according to a new study in the Journal of Consumer Research.
Retailers and restaurant owners have known this for years. That’s why things seem to be priced at $4.99 rather $5.00 or $2,999 rather than $3,000. Retailers and restaurateurs know you might think of it as a $5 purchase, but the effect it really has is when you’re making a comparison. Shoppers all claim to “round it up” in their heads but research seems to indicate that few actually use the self discipline to do so when comparison shopping. Yet most people think they’re the exception!
According to the study’s authors, Kenneth C. Manning (Colorado State University) and David E. Sprott (Washington State University):