295 vs 300 – ticket prices and buyer psychology
One of our organizers recently asked “We’d like to price our tickets at even hundreds, as we feel it’s most in line with who we are. But consumer psychology tells us that people tend to buy more if the price is e.g. 295 instead of 300. What do you think?"
Well. Don’t mind what we think. Let’s look at it, big data style (is what we thought).
So, we hooked up with our datapartner, Activity Stream. They are masters of data, and diving into millions of ticket purchases is like a Sunday stroll for them.
Our question was: Does x95 perform better than x00?
First thing we did was to remove the events that were sold out in a day. Price probably isn’t a factor, we all agreed. Then we went on to remove all other sold out events from the same logic, as what we wanted was purely events where tickets were available until the event date, so we could compare sold capacity.
Left with 7.8 million tickets, we dove in. And quickly found that x95 didn’t perform better than x00. Actually data suggested that x00 performs marginally better, but the experts said that it wasn’t statistically significant, so we settled for the conclusion that pricing at even hundreds didn’t harm ticket sales.
But, TVs are always priced at ‘edge prices’, e.g. 6,990 kroner, so there must be better sales at these price points? We asked another expert, Clara Zeller of Kl.7, who is an expert in behavioral science, why ticket sales don’t appear to follow the same logic:
“Actually it makes pretty good sense that the tickets priced at x00 performed better than the x95. This is based on a cognitive theory called perceptual fluency that basically argues that we perceive round numbers as more trustworthy and representing higher quality. This doesn’t mean that you should always strive to sell your products and services at round prices though – in some cases pricing at .95 and .99 can a better alternative because it can unconsciously activate a cost-saving mindset which is desirable for typical daily low-involvement purchase decisions”, says Clara.
Activity Stream is a datapartner of Venuepoint, creating magical dashboards and data-based tools for organizers. They were founded in Iceland and the huge potential and capabilities of the company recently landed them a 2 million dollar investment. If you want to see what they can do to your data, please don’t hesitate to contact us. Or if you want to know more about them: http://www.activitystream.com/
Kl.7 is a consultancy company specialized in behavioral science and how companies can optimally set up their operations to induce optimal behavior in customers and surroundings. For more information: www.kl7.dk
More info on round prices: See study by Lynn, Flynn, & Helion (2013) “Do Consumers Prefer Round Prices?” Journal of Economic Psychology.