Have you ever thought how your pricing strategies affect online shoppers?

We decided to investigate how psychological pricing affects online success rates of your ads on Gumtree. Psychological pricing is the practice of setting prices lower than rounded numbers. It’s believed consumers react emotionally instead of rationally and do not round up and so view the price as lower than what it is.

We looked at prices of vehicles on Gumtree with rounded numbers e.g. $24,000 and those ending in non-rounded numbers eg. $23,900. We found that 60% of Dealers on Gumtree use psychological pricing while only 14% of private sellers use this strategy.

Interestingly, when we compared the reply rate on vehicles with and without rounded numbers, those vehicles with rounded numbers get more responses! In fact, Dealers with non-rounded numbers receive 25% less replies than Dealers with rounded numbers and private sellers with non-rounded numbers get 12% less replies.

How this translates to the pricing used in dealerships is debatable. There are arguments to say that psychological pricing is effective in dealerships, as it suggests to consumers that vehicles are marked at their lowest possible prices. There are however, contradictory arguments, to say rounded numbers are better as they reinforce the perception of quality. What’s undeniable is the evidence that whole number pricing results in more leads on Gumtree.

There are additional benefits to using whole number pricing strategies on Gumtree as it can impact your ads visibility within price specific user searches.

If you price your $10,000 vehicle at $9,999 you remove your ad from certain price specific car searches e.g. when a user searches for cars between $10,000 and $20,000 the car won’t be shown even though your car is for all intensive purposes, a $10,000 car.

Why not experiment by adjusting your prices next month to find a price point that increases replies for your ads?