Friday, November 24, 2006

Reverse Psychology

Everyone knows why stores sell things for $1.99 instead of $2. It's because we tend to give more weight to the first digits in a price rather than the last. So even though we know that $1.99 is functionally equivalent to $2, we'll give the first a bit more consideration.

However, it seems to me that the reverse happens when you are cutting a price. Dell is offering me a deal in which a $799 laptop is cut down to $719. That didn't seem like much of a deal. But I think that if they had cut it from $800 to $719 it would have seemed a bit sweeter. Something about all those 9's obscures the discount.