The Mystique of Prices Ending in '7': Myth or Reality?

Think of a Number Between 1 and 10

And most people think of ‘7’!

Because of that, when I speak to audiences about pricing, there is a question that comes up frequently – “does it make a difference to end a price with a ‘7’?”. Sometimes there is a close variant – “do prices with ‘7’s in them convert better?”.

The idea is that prices ending in '7' are more effective. They increase conversions. The rationale behind this is that the '7' makes the price seem more precise, giving an impression of careful calculation and discounting.

Another story suggests that '7' pricing stands out because it’s less common than prices ending in '9', making it catchier and more memorable to consumers. In an environment where most prices end in '9', a '7' can appear unique and, therefore, more attractive.

What does the science say? Over the years I have searched the academic literature for papers dedicated to testing the impact of the number ‘7’, and have yet to find one. If anyone knows of one, please send me the reference!

I have tracked down a reference to Ted Nicholas, a very successful businessman and marketer, who died recently. It appears that he was keen on prices that ended in a ‘7’, such as $19.97 or $27.97. But, as best as I can establish, it was just a theory that was invented by him and then repeated by lots of other people.

There was a time (around 20 years ago) when prices at Asda often ended in 97p, such as £2.97. At the time I was running a company which sold electrical goods, and we were negotiating with their buyers to add a mail-order service under the Asda brand for those products. I remember the buyer telling me that prices for anything we added to their range had to end in 97p because ‘that’s our thing’.

Was there any science behind the 97p? None that I could find. It just seemed to be that it slightly differentiated them from the other retailers who might end a price with 99p. Maybe they thought the extra 2p difference underlined their message of being cheaper.

Interestingly, Asda don’t seem to do it anymore. I can’t remember when it stopped, but I don’t think I have seen a 97p price ending product for some time, and I have just had a quick check online and can’t see one on their website. I have read that Asda serve 18m shoppers a week, so my guess is that they sell around 125m products every day. Perhaps someone multiplied that number of items by 3p and thought ‘I’ve got a neat way to increase our profits by £3.75m every day.’

And this is where we need to give a big round of applause to psychotactics.com. They also couldn’t find any academic research backing up the ‘7’ ending for a price, so they decided to do their own. They changed their prices to end in ‘8’, or ‘2’, or any other number that came into their head, including ‘7’. And what happened? A big fat nothing. Not only did the ‘7’ ending have no effect, most of the other number also had no effect… but I want to reserve a special mention for prices ending in ‘9’.

Charm Pricing: The Power of '9'

Charm pricing, or prices ending in '9', has been extensively studied and proven to influence consumer behaviour positively. The 'left-digit bias' makes these prices seem lower than they actually are.

I have tested this myself at a company that priced everything in round £. I took all the products that the company sold which were a single digit price (£1 to £9) or ended in a 0 (£10, £20 etc) and split them randomly into two groups. One was a test group, the other a control group. I knocked 1p off the test group products to change £6 to £5.99 or £30 to £29.99. I then left them for 3 months.

At the end of that time I used the control group to remove any weekly variation in sales volume, and compared the sales after the 1p change with the sales before. Sales volume had gone up by 36%.

And that’s because of something that psychologists call ‘left-digit bias’. This is definitely a real effect, validated in the academic literature time and again. You can see it for yourself, even with high-priced items. Just visit the Apple store right now – want to buy an iPhone 15 Pro Max? That’s £999, thank you. An iPhone 15 Plus? No problem, £799 to you. Need a new Macbook? The Pro starts at £1,699. Prefer a desktop computer? Let me introduce the range to you, starting at £1,399.

Does Charm Pricing work everywhere? I would avoid it for high-end or luxury products, where prices ending in '9' can sometimes cheapen the brand's image. In these cases, rounded numbers or prices ending in '0' might better convey a sense of quality and exclusivity.

Does it work in a B2B context? Yes, with certain qualifications. Certainly it works more strongly when selling to SMEs and micro businesses, where the founder is still running the business; and it works for less considered purchases which are often delegated down the organisation. It has less impact for highly competitive products or services, or where quality, risk or reliability are key concerns. 

So don’t end prices in a ‘7’, even if it is your lucky number.

I have a short postscript to add to this blog. If you read the pricing test run by psychotactics.com and the only thing you took away was ‘prices ending in ‘7’ don’t have any impact’, then you missed something. They saw no impact in sales whatever price ending they chose! In other words, their prices were totally inelastic within a $10 band, irrespective of the price of the item. And this is true in many industries and circumstances. We all assume that we’ll lose sales if we increase prices, and that isn’t always the case – it’s a lot more complicated than that, which is why I’m so keen to do these kind of pricing tests with my clients.