Extra Credits - the JC Penny's Effect

[EricKei]

http://www.youtube.com/watch?feature...&v=EmCn-csZStA

Talks about Firefall, but first, about what happened when JC Penney tried to cut out all of the "$XX.99" and "everything's on sale but not really cheaper" bullshit. tl;dr version: Customers HATED it and they suffered terribly for the horrible sin of trying to deal straight with people. Sometimes ya just can't win for losing x.x

For this site's purposes, the former is probably more interesting.

(for those unfamiliar, it's an animated series on game design, presented mainly in regular-person-friendly language, from a group of industry vets. Quite good.)

[Chromatix]

Oddly enough, when looking at prices in pre-decimal Britain, they are all in round numbers. You never saw a price such as "2s 11¾d" - it would be three shillings even, often written in shorthand as "3/-".

Honestly, that was probably force of habit from the days when the currency was stable enough for people to really, intuitively know the value of money. They would often go shopping not for a pound (weight) or an ounce of something, but for a penny-worth or three of it - and a penny was a large, solid copper coin worth enough to actually buy something useful. Not very much of something, granted, but something nonetheless.

These days, I think round-number prices are associated with second-hand sales - not the image JC Penney would want to cultivate - and people are used to thinking of the MSRP as the "value" of an item - rather than, as would be logical, considering the item itself for it's value, and treating the price as the cost of obtaining it.

[EricKei]

Well, part of the issue is that, pricing items as $XX.99 is a highly effective, if deceptive, practice with a long history in the US.

Everybody KNOWS in their minds that there's no practical difference between "$4.99" and "$5", but it "feels" better to see the latter, and, afaik, the psychological effect is "that item is "$4 and something, not $5", even tho we know better. That's why fuel prices here are typically displayed with pricing ending in "9/10 of a cent".

[lordlundar]

JC Penny wasn't the first to suffer from the perception effect. There was a cosmetics company who had a policy of selling the cosmetics at a reasonable level without the massive markups the others did. The prices were enough to make a tidy profit and were still drastically less than the competitors.

They didn't last long, not because of lower profits, but because the markup has been so ingrained into society that the lower pricing gave the perception of lesser quality(they were actually at the same level or better quality) and people refused to buy it.

[EricKei]

Yeah. I've seen that at work before, as well. The sad thing is, things like this effectively function as psychological experiments (however unintentional) that prove Corporate Guys who say "The customers do not know what they want" right. Scary thought.