Title: Comma N’ Cents in Pricing: The Effects of Auditory Representation Encoding on Price Magnitude Perceptions (Fee or subscription required)
Authors: Keith S. Coulter (Clark University), Pilsik Choi (Clark University), and Kent B. Monroe (University of Richmond)
Publisher: Journal of Consumer Psychology, vol. 22, no. 3
Date Published: July 2012
Suppose you’re shopping for a laptop computer and have narrowed your options to two similar models. One has a price tag of $1522 and the other is being sold for $1,522.00 — same amount, right? Not exactly, according to this study, which finds that the inclusions of commas and cents in prices can make consumers think certain numbers are bigger than they really are — with the “difference” having a potentially big impact on another set of numbers: sales figures.
For example, most people would read the $1522 price without a comma as “fifteen, twenty-two,” and the price including the comma as “one thousand, five-hundred, twenty-two.” The former takes less time to say and fewer letters to spell out. In short, it can come across as the smaller of the two, contrary to reality.
Prior research has focused on how an advertisement or store display can shape perceptions of prices. Consumers can be subconsciously influenced by a variety of visual cues, including the size of the numbers and letters or an ad’s colors, layout, or use of a spokesperson’s image. These cues can have an impact on consumers’ recollection of the cost and their sense of a product’s “price magnitude” — how large or small they judge the price to be. But little attention has been paid to how the presentation of the numbers themselves, in either written or spoken form, affects how consumers evaluate a price tag.
Using three experiments, the researchers had participants evaluate the price of different products, testing variations of visual and aural presentations.
In the first experiment, 216 members of an online community heard short radio commercials for a fictitious electronics retailer advertising special prices for laptops (costing either $1,493 or $1,584) and flat-screen televisions ($1,362 or $1,645). The prices were pronounced either in terms of thousands (as in “one thousand, four hundred, ninety-three”) or hundreds (“fourteen, ninety-three”). Importantly, the number of syllables was the same for the sets of numbers; whether the laptop cost $1,493 or $1,584, it took nine syllables to articulate the price in terms of thousands and five syllables in terms of hundreds.
After hearing the radio spots, the participants evaluated the retailer’s prices on a 10-point scale, with 10 being the highest. The analysis showed that participants consistently judged a price communicated in thousands as more expensive, relatively, than the same price expressed in hundreds.
The inclusion of cents also had a significant impact on participants’ judgments. Specifically, an increase of less than one-hundredth of 1 percent in the price caused by adding cents led to a nearly 9 percent increase in participants’ perceptions of the new number’s magnitude. The authors note that this is especially interesting because the word cent inherently implies a much smaller amount than the words thousand or hundred when verbalized, so one might expect that adding cents would actually drive down participants’ evaluations of the cost. And yet the opposite occurred.
The second experiment used the same products as the first, but presented the prices both visually and in audio form on computer screens to 192 students. The prices varied but contained the same number of syllables; some had commas, and some also included cents. The participants were told they would see two products and their prices, and to memorize the prices as accurately as possible. As in the first experiment, participants first rated the prices on a 10-point scale, then tried to remember the exact price for each product.