The 99 Cent effect, maybe you’ve heard of it, maybe not, but did you ever wonder why prices end in 99? Turns out there is a proven psychological effect (dating all the way back to 1800’s) with prices that end in 9. Researchers at the Rutgers School of Business found that prices ending in .99 communicate low price to consumers and consumers are then more likely to buy.
Supporting this, a study done at a women’s retailer found the one cent differences in price had a “considerable effect” on sales, with items priced ending in 99 “significantly outselling” those with a price ending at 00.
So, how is this relevant to the world of real estate? Well, ever notice how most properties price ends with a 9? For example, a home sells more quickly priced at $99,999 versus $100,000. There is some evidence consumers have become somewhat immune to this pricing strategy due to it’s overuse, so some in the real estate industry have taken to ending prices in 000, as this “stands out” in a list ordered by price.
I don’t know, I think you can still take advantage of the psychological advantage of a price ending in a 9 while standing out from the crowd, maybe by ending your price point lower, say at $149,499 instead of $149,900. The oddball price stands out and yet still c0mmunicates a deal. Try it the next time you sell, see if it works, you never know, getting prices below that “halfway” mark may be the next magic 99!
Your Friend in Real Estate,
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