Psychology of Pricing

[Mr_Loon]

Considered putting this in the how to calculate a price for Pyra thread but this meant to be a little more general yet still hopefully useful when it comes to pricing the Pyra.

Here are a few personal thoughts / expectations when it comes to pricing :

When buying something the price I'm really interested in is the price in UK£ paid to buy the item & have it delivered.

When I see the price of something I find it hugely off putting to find out at checkout that VAT / Sales tax was not included in this price, it almost seems like a deliberate con to me. This may be a UK thing as I understand that in other places it is the norm to price things without sales tax being mentioned until checkout. It is also expected that it will be very clear if the stated price includes delivery charges. It should be very easy to find out what these delivery prices are before checkout.

Despite thinking myself a logical person I am definitely susceptible to psychological pricing for some reason £99.99 seems a lot more than 0.001% cheaper than something priced at £100.00

I like to budget for major purchases, thus being 100% clear on the final price is important. In relation to Pyra I'd like the option to pay all money up front rather than pay half now and then something else later that may go up or down depending on currency fluctuations.

 

[FIQ]

Seeing a price without VAT was always confusing for me, allthough seeing it without delivery costs is something I'm used to (Also, you can't really estimate delivery costs in general, especially not 3 months before a release...)

 

[Blue Shadow]

The price in the price calculation is without taxes because it's the international price. In germany it is also common to show all prices with VAT included (with the exception of business-to-business shops) and the prices in EDs shop are also shown in that way. So there should not be much confusion here.

 

[elw3]

I hate prices that end with crude numbers.
Ill take the 100€ one just to demonstrate against this weird crude stuff.

 

[levi]

I always round up these numbers in my head, so I don't think the .99p trick has much effect on me. But yeah, it's good that ED's shop automatically adds VAT if you're in the EU, and not if you aren't (where it'll depend on local taxation, and also sometimes on whether the local post office notices the package declaration).

 

[Mr_Loon]

The price in the price calculation is without taxes because it's the international price. In germany it is also common to show all prices with VAT included (with the exception of business-to-business shops) and the prices in EDs shop are also shown in that way. So there should not be much confusion here.

In terms of the Pyra I'm thinking about what prices should be used when promoting the crowd funding (i.e. pre ordering) campaign. My concern is that if the Pyra was promoted as costing €500 to UK customers then many of them would be really put off to find this did not include VAT. However it's my understanding that in the US & Canada it is entirely normal to price things without sales tax included, not sure if this also applies to import duty. It would be good to hear from people in the US what their personal expectations would be relating to this.

 

[rygD]

import duty

What's that?

As long as it is around $650 before everything else gets applied (taxes, shipping costs, etc.) I will be fine with it. I hope that price includes 3G/4G. My opinion may not be typical of people in my part of the world, but it is true that we usually only see the price before all those extra costs are applied.

My question for Brits and others on that side of the water is what is it like when you go shopping in a physical shop? Over here prices don't include taxes, as that stuff all gets added on when they ring you up. Some places have different taxes for different types of items, and I think there are some states with no taxes on certain types of things (sales tax, or food tax...maybe it was prepared food taxes, I don't remember).

 

[Askarus]

In Germany you'll always see the full price as a customer.
Including taxes. Shipping costs are not added to the price but listed seperatly with the item (Makes sense as you can order multiple items and pay shipping costs only once).

I would dislike it a lot if I had to pay more than the price listed.
That's how the DragonBox shop works.
Outside the EU you don't have to pay German Tax but customs might add the one of your country.

 

[Djoga'Ro]

In germany price tags show the prices including the tax that applies to the given product.
In busines to business you see prices before tax. That also applies to wholesales (is it called that, when I talk about metro or selgros?) - price tags w/o tax.

 

[Haraldur]

UK: all prices up-front, with notable exceptions: some of the more annoying restaurants automatically add a "service charge" to the bill as a tip-alternative (do not get me started on tipping -- the second biggest deterrent, after healthcare, for me to visit the USA) plus online flight booking.

 

[rygD]

It isn't required to leave a tip.

 

[Mr_Loon]

My question for Brits and others on that side of the water is what is it like when you go shopping in a physical shop? Over here prices don't include taxes, as that stuff all gets added on when they ring you up.

There would probably be civil unrest* if that model was applied here.

The sale price listed for the item is the price you pay, which seems sensible to me.

Had, what to me was a really weird retail experience in the US, I had $20 on me and my purchases came to just less than that, only to be told at checkout my bill was a bit more than $20. The cashier looked at me as if I had 2 heads when I suggested that it might be sensible to label the cost of items according to what you are actually going to be charged. Luckily I had my Visa card with me so beer could be bought.....

* or more likely : embarrassed silence, or possibly even hard stares followed by quiet tutting.

 

[rygD]

There would probably be civil unrest if that model was applied here.

The sale price listed for the item is the price you pay, which seems sensible to me.

Had, what to me was a really weird retail experience in the US, I had $20 on me and my purchases came to just less than that, only to be told at checkout my bill was a bit more than $20. The cashier looked at me as if I had 2 heads when I suggested that it might be sensible to label the cost of items according to what you are actually going to be charged. Luckily I had my Visa card with me so beer could be bought.....

It is pretty irritating, but if you are in an area long enough you figure out the taxes or leave a buffer. Taxes aren't the same across the country, so that is probably part of why they don't include taxes in the price. It also might help with advertising, unless people in states with higher taxes are to end up getting a discount from the people selling them things, and it is neither the company nor the customer that has any control over that, since the state needs to get paid, too. It gets even worse when buying across state lines, such as online purchases and mail order. This all comes down to states being able to do some things their own way (and sometimes local governments...you probably wouldn't have been able to get that beer in a dry county).