Can rounding up price discounts reduce sales?
Subhash Jha, Abhijit Biswas, Abhijit Guha, Dinesh Gauri
Journal of Consumer Psychology · 2024 · Volume 34 · Issue 2
Abstract
Some retailers round up price discounts, such as displaying a 7.7% discount as an 8% discount. In such instances, lay beliefs would suggest that displaying an 8% discount (vs. a 7.7% discount) wouldincreasepurchase intentions. In this research report, however, we show that displaying a rounded-up, higher-value discount (8%) versus a more precise but lower-value discount (7.7%)reducespurchase intentions. Specifically, we show that using a more precise discount framing increases perceptions that the discount duration is shorter, in turn increasing purchase intentions. This research report presents a relevant and counterintuitive effect, and we propose contributions to work on both behavioral pricing and numerical information processing. Furthermore, this work has implications for practice, showing how to optimally display price discounts.
Keywords
discount duration, numerical precision, price promotion
Enable JavaScript for citation tools and additional paper interactions.