Hmm, gonna add some extra thoughts/comments:
People have usually made up their mind if they want something long before they see the price, all the price does is trigger the parts of the brain that decide if you can afford it.
Um, that's basically equal to saying "if we want something, the price will dictate whether we buy it or not". Which is simply common sense. You just added a little bit more wrapping around it.
(or maybe I misunderstood something?)
Not quite, I was saying that we know if we want something or not, that is conscious knowledge. Whether we can afford it is for most of us more of a feeling than simply "I have X money, I can afford to buy Y", mainly because accountants aside, most of us don't map out our spending for any given month exactly. Which is probably why most of us occasionally check our bank statement and are shocked about how little or much we have left over come the 20th.
The .99 trick plays on that feeling of how affordable something is, but it isn't the only trick.
I've been slowly upgrading my vast DVD collection to Blu-ray, and I have price points in my mind for categories of titles. I don't mind paying under £5 for a good catalogue disc like say Gremlins, it's a film I've seen loads of times but I love, yet I've got the DVD and loads of other Blu-rays to watch. So when I see it under £5 I'll buy it.
But we know that if I see it for £5.29 I'll rationalise the 29p away and get it, which is what I did today. It's only 29p, but then I'd rationalise 79p away too, and tbh I'd probably rationalise 99p as well.
It's not logical, because I know one day that Blu-ray will be under £5, but it's close enough. And that is probably how things work with larger prices. £399.99 is under £400, it feels under £400, and most people think about prices this way. We think, I'll buy that when it's under a round number, so we get used to feeling like things that end in 99 are way less than the rounded up price than they actually are.
At least thats my theory anyway.
I don't think it's a case about whether it affects us or not. It's about whether we are smart enough to acknowledge it and similarly counter-measure against it. Like for example, forming an impression of a sleazy car salesman, or systematically rounding every price to the nearest round number. Or in grocery shopping, always checking competing products' kilo/liter/bulk price to know where it stands on the relative scale. After that, the .99 doesn't seem that effective anymore.
I agree that in many circumstances, many people can overcome this type of programming. Governments in a few countries (UK included) have introduced cooling off periods to prevent salesmen from pressuring people into buying things that they later regret.
This is because most people who have bought something on the spur of the moment, when manipulated into doing so, later realise what happened.
And it's not about feeling superior or some sort of elitism, it's just the simple acceptance of the fact that some people are smarter than others and that certain hobbies require a little bit more intelligence than others. Like linux certainly does. Think about your friends who use linux on a daily basis. Would you say they are smarter or dumber than the average person? And I'm not talking about devices using "dumbed-down" Android, btw, I'm talking about devices where people have had to make a deliberate decision to opt to linux, like on desktop computers or laptops.
Technically Mac users use Unix on a daily basis, and most people would say Unix users would be smarter than Linux users. Personally I think there is a short phrase which neatly sums up any such philosophical thought process like the above, "bad science".
Furthermore, IE users actually ARE on average less technologically competent than Firefox/Chrome users. Note: I didn't even say "dumber", as there are different types of intelligence. But I also think the people reading tech sites are smart enough to pick out the "average" or "statistically", and know what it entails. They also usually know something about the story behind the browser wars, and thus understand the factors behind the numbers. "Tabloid news" are another thing entirely, and are directed at the masses.
I think the eagerness to believe that IE users are dumber says more about those of us which enjoyed reading (and I know I did) the fake science news last year, than IE users themselves:
http://www.bbc.co.uk/news/technology-14389430
Own empiric notions from Finland:
Different chains seem to have different pricing cultures. Some favor odd numbers (like 1.43€), while others prefer the .99 trick. Also one very often-seen method for sales is using round numbers, especially for multiple items, like 4 chocolate bars for a total of 2€. Games and music are almost always with .99, except if they're in the bargain bin, which means 5€ or 10€ round prices. It's also VERY common (possibly even mandatory?) to list the litre/kilo/bulk price, if at all possible. Our smallest coin is 5 cents, so the final check-out price is rounded to the nearest .05 or .00, unless paying with plastic.
There a technique in advertising where you make something stand out by just being different. It only works whilst most other people don't do it.
But anyway, a lot of this is a mute point, as clearly the Pandora's target market are people who don't understand limited companies and UK law, that just want to sue Craig. So really what ED should do is release a special limited edition Pandora with a special pre-filled in class action law suit.
