
Sell Upgrades Above Round Thresholds
Spending money feels easier when prices surpass a round number.
Do you sell upgrades to a product?
In a recent study, researchers sold coffee:
- Small Coffee: $0.95
- Large Coffee: $1.20
Customers preferred the small coffee because it seemed like a better deal.
But then researchers added $0.05 to each price:
- Small Coffee: $1.00
- Large Coffee: $1.25
In this new assortment, customers preferred the large coffee. Even though the large coffee was still $0.25 more expensive, it seemed like a better deal because both coffees were now priced above $1.00 (Kim et al., 2022).
Round numbers are spending thresholds.
Suppose that you see a $49.95 backpack.
Your budget was $50, so great. You proceed to the checkout.
But hmm, the total (with tax) is now $51.95.
It’s only $2 more, right? So you still plan to buy it.
However, look closely: You’re now spending above $50. If you notice a superior backpack for $65, you might be tempted to buy this upgrade instead of the $49.95 backpack. Once you pass a round number, like $50, new expenditures feel less painful.
That same effect could happen with:
- $500 flight
- $5,000 deposit
- $50,000 car
How to Apply
- Charge Round Prices With Add-Ons. More participants upgraded their car rental and hotel when these prices ended at 200 Yuan and 300 Yuan (vs. 199 and 299; Li, 2024). If you sell a freelancing service on Fiverr or Upwork, a price of $95 or $99 might discourage customers from buying add-on services.
- Keep Tallied Prices Below a Threshold. Perhaps you could sell a freelancing service for $100 with 4 add-ons of $95 each. Adding one service will increase the price from $100 to $195; both prices feel similar because they reside within the same numerical bracket. Likewise, adding all 4 add-ons would increase the price from $100 to $480, so the total price remains below a major threshold of $500. Indeed, upgrading from $2002 to $2999 felt easy in one study (Lee et al., 2024).
- Kim, J., Malkoc, S. A., & Goodman, J. K. (2022). The threshold-crossing effect: Just-below pricing discourages consumers to upgrade. Journal of Consumer Research, 48(6), 1096-1112.
- Lee, E., Kim, J., Shin, S., & Koo, C. (2024). Unlocking revenue: Psychological pricing effect for airlines’ upselling strategies. International Journal of Hospitality Management, 119, 103720.
- Li, F. S. (2024). The influence of the base option’s price format on tourists’ upgrade intention: the moderating role of tourists’ mindsets. Tourism Critiques: Practice and Theory, (ahead-of-print).

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