Pricing is more of an art than a science. Certain prices get accepted over time as being psychologically important. But unless you run your own pricing experiments you’ll just be following the crowd.

Earl Nightingale said “Whatever the great majority are doing, do the opposite.”

And there’s a lot of truth in that matter.

Until a few years ago, clothing here in the UK was typically priced ending in 99p.

Then one of the major retailers experimented by changing the prices to round pounds. The result was simple: no difference in the quantity of sales but a big difference (millions of pounds) on their bottom line profit.

The rise of the pound and dollar stores would suggest that isn’t the only industry which benefits from round pricing.

But, despite that, lots of things are priced ending in a variety of “magic” numbers.

It used to be that 99 was the magic end number – partly because £9.99 is supposed to sound a lot less than £10, partly because it meant that in the days when people paid cash, shop assistants needed to open the till drawer to get the change.

Then Ted Nicholas did an experiment where he found that products ending in 97 cents pulled a bigger response and giving away the extra 2 cents made more money.

Despite the caveat that you need to test the result for yourself, his figures have been used by a lot of marketers over the years including some big retail chains here in the UK.

Some numbers are considered unlucky – for instance, there’s often no 13th floor on buildings in the UK and the USA. But Italians consider the number 13 to be lucky, so they wouldn’t be fazed by its use as a floor number.

There are other magic numbers in product pricing:

Generally there are gaps in how prices go up: every pound or dollar from £1 to £5, then there’s a gap to either £6.99 or £7.99, then another gap to £9.99.

The same goes at higher price points – look around a supermarket or somewhere like Amazon and you’ll see a grouping of prices at certain points.

The really interesting point about pricing is how we react according to how prices are given to us.

That really does take on a magic turn.

In his book Influence, Robert Cialdini examines the effect of pricing according to which price we encounter first.

Generally, we’ll spend more if the first price is high than if it’s low. So if you go into a restaurant and the prices start with the most expensive – maybe lobster or steak – and work their way downwards, there’s a very high chance that you’ll spend more than if they start with the cheapest main course and work their way upwards.

The same goes in retail environments – it’s almost certainly why online shops default to a high-low sort order and you have to click to change that.

Another interesting – and definitely magical – pricing option is introducing a third choice that no rational person would choose.

Most of the time, prices are either “take it or leave it” or a choice between two options.

But sometimes there’s a third option introduced that makes no logical sense until you find out the underlying figures.

The Economist did this with subscriptions: you could take out an internet only subscription for $59, a print subscription for $125 or a print subscription that included the internet subscription for the same $125.

No-one as far as I’m aware takes up the print only subscription.

But the “free” internet subscription sways a large number of people to take up the more expensive option.

Without the decoy, 68% of subscribers chose the cheaper web only option.

With the decoy, 84% chose the pricier option.

If you’re able to do that kind of price experiment in your business it’s definitely worth trying!