To: WSFAlist at WSFA.org
Date: Wed, 2 Nov 2005 02:55:37 -0500
Subject: [WSFA] Which is bigger?
From: ronkean at juno.com
Reply-To: WSFA members <WSFAlist at WSFA.org>

On Tue, 1 Nov 2005 23:21:42 -0500 "Ernest Lilley"
<elilley at mindspring.com> writes:
> I've always been intrigued by this scam, because I can feel it
> working on me
> even though I know it's only a nickel. I just look at it and I know
> I'm
> thinking of it as 40K plus...are the rest of you too smart to feel
> it, even
> if you're sure you wouldn't fall for it?
>

Retail prices are usually set a little bit below round numbers, e.g.
$4.95 or $4.99, instead of $5.  $4.95 is 'under $5', but $5 is not.  I
would call it a psychological trick, rather than a scam, because the
practice does not actually cheat anyone.  Retailers clearly believe that
they will make more profit offering a mass-produced item at $4.95 than at
$5, because many more pieces will be sold at $4.95 than at $5, albeit at
a slightly lower profit per piece.

Almost everyone is smart enough to understand that $4.95 is not really
significantly less than $5, the difference being only 5 cents, if their
minds become focussed on the issue.  But since the price difference is
trivial, each time they think about it, they may conclude that the issue
is trivial, and thus be less likely to remain conscious of the
psychological manipulation.

A similar psychology works when a seller has only one item to sell.  If
an individual advertises their car for sale, they will probably get more
calls if the price is set at $950 than if the price is set at $1000.
They will probably have an easier time selling the car if they agree to
accept a somewhat lower price, once a prospective buyer is ready to make
a serious offer.

Ron Kean

.