Many self-published authors, focused as they are on the U.S. market, tend to take the lazy road and simply input a USD price and allow the likes of CreateSpace, Amazon, and Kobo to auto-convert to other currencies. The problem with this approach is that, between currency fluctuations and differences in sales tax in various countries, one’s book price can be all over the map. More importantly, however, by taking this approach you are likely cheating yourself out of a potentially lucrative sales strategy: charm pricing.
Charm pricing, also known by various other terms such as pretty pricing and magical pricing, refers to pricing that is believed to have a positive psychological effect on consumers and encourages higher sales volume.
Charm pricing has been around for about a hundred years, and in some ways has become a chicken-and-egg concept, with the ubiquity of its use skewing any attempts to verify its authenticity. Nevertheless, studies that have tried to measure the effects of charm pricing do point to some veracity to our widely held beliefs about it.
Essentially, the thinking goes like this:
- Prices that end in .99 are associated with low prices, sales and bargains.
- Prices that end in .95 are associated with good value.
- Prices that end in .00 or which do not contain any decimal digits (e.g., $120) are associated with quality and luxury.
- Prices ending in .78, .88, and .98 may also be associated with low prices (the data was inconclusive).
- Prices ending in .49, .50, and .90 may be perceived negatively (also inconclusive).
- Prices that when spelled out have fewer syllables are perceived as lower, so $12.00 is perceived as less than $11.00 even though it is clearly not; note this only works when the price is viewed in isolation, not in comparison.
With regard to the third point, you will see this belief in effect in restaurants that want to be perceived as offering quality over price — the menu will say “$12” instead of “$11.99” — and in jewellery stores and other shops selling luxury items. Some even go so far as to eliminate the dollar sign as well.
In our industry, if you look at print book list prices you will see the concept of charm pricing at work. Most hardcovers and new releases have list prices ending in .95 (good value) or .00 (luxury, quality); it is the same with trade paperbacks when first released. Older trade paperbacks and mass-market paperbacks have list prices ending in .99 (low-cost, sale, bargain).
Amazon, who are committed to presenting ebooks as the low-cost reading option, encourage the use of the .99 format: in the U.S., Canada, Mexico, India, and Brazil where tax is either not included in the displayed price or is not applicable, each pricing band tops out at a figure ending in .99. In Europe, where the display price must include VAT, the cap for euros is €9,70; when 3% VAT is added, this amounts to €9,99. The anomaly is the UK, where for the life of me I do not understand the price cap of £7.81: when 3% tax is added, the price is £8.04, not £7.99. (Note: KDP’s EU pricing caps will change on January 1, 2015 with changes to VAT in the EU.)
Charm pricing is cultural as well.
In China, the number 8 is considered universally lucky, while the number 4, which sounds like death when vocalized, is considered bad luck. In Western cultures we generally avoid the number 13. In Japan the number 4 is bad luck for the same reason as in China, and the number 9 when vocalized sounds similar to the Japanese word for torture or suffering—thus, Amazon have set a price cap of ¥1250 for that market, not ¥1249 or ¥1299 in keeping with the format of the other KDP price bands. In Japan, the numbers 4 and 9 are considered so unlucky that buildings often do not contain floors or rooms in these numbers, and the number 43 is particularly avoided in maternity wards because phonetically it means stillbirth.
If you check sites such as Google Play, who set the sale price themselves for indie content, with very few exceptions you will see the use of the .99 format. Apple contractually obligate publishers to set prices ending in .49 or .99 except for Japan, where the price must be rounded up or down to the nearest round yen number.
Charm pricing is considered so important in retail that whole consulting industries have arisen to address it, and studies have concluded that the use of charm pricing can literally improve sales by, on average, 24%. Authors should take this into consideration, and set a specific price for each jurisdiction made available to you by each of the retailers. Taking the lazy road of auto-conversion may be robbing you of sales.