People suck at math and this is how they confuse people into not caring what the actual price becomes when they have to add multiple items together.
What’s 19.99 + 21.75 + 4.99 + 3.99 + 1.99? Can the common person do that math in their head while grocery shopping? What about adding the tax to that total? Not a chance.
Most people probably don’t even know what the sales tax is in their own state.
The major reason given is that taxes vary so much in the US by location that it would be onerous for businesses with locations in different areas to print different price tags and advertise prices broadly.
It’s even an issue online because, until you enter your address, the online retailer has no clue what your tax rate will be, and they have to assess tax based on the purchaser’s location. Postal code isn’t always enough, as they can be shared by different cities with different tax rates.
Some areas also vary tax by date (tax free holidays), though I don’t think consumers would care if their total ended up being cheaper than they thought.
A national standard VAT would be the only way businesses might start including tax in price, but there’s no way to do that without a constitutional amendment. States have the power to tax, and they’re not going to stop now even if they receive VAT revenues.
And then calculates tax right at the register. They have everything they need to do it, it’d hurt their bottom line and be consumer friendly so they don’t.
In some countries like India they have GST (Goods & service tax) which is applicable all over India. It was implemented in 2017 and has unified the indirect tax system across the country. This means that the same tax is levied on goods and services irrespective of the state or territory in India. Most items have 18% GST and the price tag always shows tax included, which is convenient for buyers.
Most people round down. Their brain locks on to the 1 of 19.99, and approximates it to 10.00. We need to actively counter this to see it as 20.00. It’s a skill most people don’t apply all the time, and a number can’t even do.
Once you can do it reliably, it’s mind-boggling that others can’t, but it’s still a learnt skill, that needs to be applied.
It’s a subconscious thing. It’s how our brain is wired. It’s a bit like advertising. Most people don’t like ads. However, when confronted my 2 similar products, we will go with the familiar one. The source of that familiarity is irrelevant, ads make it familiar, just the same as using it, or a recommendation.
It’s possible to override both of these effects, but that requires a level of conscious effort. I can almost guarantee you’ve been caught by both at different times. You just didn’t notice (since noticing would allow you to correct).
Basically, $19.99 is in the category “under $20”. $20.00 is in “over $20”. Without conscious correction, you act on this.
Some slight ramdom paper reading, back in my uni days. Though I’ve ran across it via other sources over the years since. Unfortunately I don’t have any links to hand though.
It might better be described as people put numbers into categories. Most people have a 10-20 category. 19.99 fits. 20.00 gets bumped up to the next box. It’s a sub/semi conscious thing. If we use our higher thought process, we can deal with the numbers. That takes effort however, by default, we chunk. The price just abuses a common rollover point most people share.
People suck at math and this is how they confuse people into not caring what the actual price becomes when they have to add multiple items together.
What’s 19.99 + 21.75 + 4.99 + 3.99 + 1.99? Can the common person do that math in their head while grocery shopping? What about adding the tax to that total? Not a chance.
Most people probably don’t even know what the sales tax is in their own state.
your price tags show the price before tax? that’s fucked up
The major reason given is that taxes vary so much in the US by location that it would be onerous for businesses with locations in different areas to print different price tags and advertise prices broadly.
It’s even an issue online because, until you enter your address, the online retailer has no clue what your tax rate will be, and they have to assess tax based on the purchaser’s location. Postal code isn’t always enough, as they can be shared by different cities with different tax rates.
Some areas also vary tax by date (tax free holidays), though I don’t think consumers would care if their total ended up being cheaper than they thought.
A national standard VAT would be the only way businesses might start including tax in price, but there’s no way to do that without a constitutional amendment. States have the power to tax, and they’re not going to stop now even if they receive VAT revenues.
It’s bullshit because every location prints their own price tags lol.
And then calculates tax right at the register. They have everything they need to do it, it’d hurt their bottom line and be consumer friendly so they don’t.
In some countries like India they have GST (Goods & service tax) which is applicable all over India. It was implemented in 2017 and has unified the indirect tax system across the country. This means that the same tax is levied on goods and services irrespective of the state or territory in India. Most items have 18% GST and the price tag always shows tax included, which is convenient for buyers.
Weirdly, my brain went through those numbers as “20, 22, 5, 3, 2.”
So they did get you at 3.99 -> 3!
Maybe because your brain wanted 5+3+2=10 instead of 5+4+2=11 ?
20+22+5+3=50 vs 20+22+5+4=51, since I was going left to right, but it works.
How is that “weird”? That’s just good numeracy.
I got through a bunch of them fine, then the $3.99 tripped me up.
Ha! That’s what they want.
Now add the sales tax. And don’t forget about bag fees and to tip Tippy.
We don’t have any of those things here.
Most people dont just round up after seeing the price?
Most people round down. Their brain locks on to the 1 of 19.99, and approximates it to 10.00. We need to actively counter this to see it as 20.00. It’s a skill most people don’t apply all the time, and a number can’t even do.
Once you can do it reliably, it’s mind-boggling that others can’t, but it’s still a learnt skill, that needs to be applied.
Most of the people i saw round down notice that and then round up
It’s a subconscious thing. It’s how our brain is wired. It’s a bit like advertising. Most people don’t like ads. However, when confronted my 2 similar products, we will go with the familiar one. The source of that familiarity is irrelevant, ads make it familiar, just the same as using it, or a recommendation.
It’s possible to override both of these effects, but that requires a level of conscious effort. I can almost guarantee you’ve been caught by both at different times. You just didn’t notice (since noticing would allow you to correct).
Basically, $19.99 is in the category “under $20”. $20.00 is in “over $20”. Without conscious correction, you act on this.
Source?
Some slight ramdom paper reading, back in my uni days. Though I’ve ran across it via other sources over the years since. Unfortunately I don’t have any links to hand though.
It might better be described as people put numbers into categories. Most people have a 10-20 category. 19.99 fits. 20.00 gets bumped up to the next box. It’s a sub/semi conscious thing. If we use our higher thought process, we can deal with the numbers. That takes effort however, by default, we chunk. The price just abuses a common rollover point most people share.
So, no source do the actual research backing your claims?
No, most people just give up after seeing the price.
All the people i saw either rounded up or rounded down by mistake and then rounding up
No. Most people round to the nearest whole number and often just pick a direction to round.
Since no one does math in their head anymore the total is always more than they expected. No calculators on shopping carts anymore either.