99¢ Pricing Alluring, Not Whole DRTV Story

“I’ll tell you what brilliance in advertising is,” Roger Sterling said in one episode of Mad Men, “99 cents.”

Just mention Direct Response television (DRTV) and inevitably “Order now, just three easy payments of $19.99!” comes to mind.

What is it about the “99” that stirs people to action?

It’s called psychological pricing and it works. C’mon, wouldn’t you rather pay $19.99 than $20.00? It just feels better.

Hypotheses abound. Consumers tend to perceive “odd prices” as being significantly lower than they actually are, and round down. Another thought is fractional prices suggest goods are marked at the lowest possible price.

And Dave Gold was one of the first to use it.

In the 60’s, he and his wife owned a liquor store where they sold wine at various prices. Noticing the 99-cent wine sold much better, they priced all their wine at 99 cents. The 79 and 89 cents sold better at 99 cents, as well as, of course, the $1.49.  (Dave and his wife went on to start a 99 Cent Only store in 1982 that grew to almost three hundred locations by the mid 90’s.) 

Other explanations date psychological pricing back to Rowland H. Macy. In an 1880 newspaper advertised 100 pieces of “reliable black silk” for 99 cents. Then there’s this: the cash register. Invented in 1879 by a Dayton bar owner, he thwarted pilfering clerks by charging a penny less than the full dollar amount. The cashiers were forced to open the register to give change, and put the dollar in the register, not their pockets.

So 99-cent pricing certainly is one way to motivate. Case in point. My wife and I were furniture shopping and she spotted this couch she liked, and said, “It’s only a thousand dollars.” I looked at the price tag and sure enough, it read “$1,099.00.”

But DRTV is a little more than that. Actually, it’s a lot more than that. It goes well beyond to educate, inform and persuade.

DRTV offers clear information about the product. It makes sure the consumer knows what it is, how it works and what they’re getting. 

DRTV connects with the consumer. It couches the product or service in terms of providing a valuable benefit. 

DRTV creates urgency. It invites consumers to call now, click now, find out more, get something free. 

DRTV has the unique ability to drive inquiry and response, while at the same time building and strengthening brand.

Bottom line, it takes more than teasing consumers with 99-cent pricing. Done right, DRTV can truly make an impact and get results. Now that’s brilliance in advertising.

 Gary Lande is a VP, Creative Director at A. Eicoff & Co., one of North America’s largest DRTV agencies.