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The Coinage Effect

 

DisciplinesMarketing > Pricing > The Coinage Effect

Description | Example | Discussion | See also

 

Description

When dealing in coins or notes, the more coins or notes that are involved, the more the expensive the items seems. If you price items to be exactly the value of a note or coin (or slightly under), then all they have to do is to give you a single note/coin.

This also works in reverse. If you give customers change with more coins or notes, it may seem to them like they are getting more change and hence that the amount they paid is not that much. Be careful in doing this not to overdo it. It can be annoying to have your pocket full of small coins.

Example

A hairdresser prices a basic cut at $20.

A market trader has a whole table of items priced at $1, and another at $5.

Discussion

Paying with a single note or coin makes a purchase easy, and hence more attractive. There is also a quantity effect, where more coins/notes somehow seems more as numeric quantity is unconsciously equated with financial quantity.

If you are affected by tipping, the standard tip may be taken into account so the price plus the desired tip adds up to a round note value.

See also

Number Rounding

 

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