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Comment by ericabiz | Hacker News Reader

It's true. I actually picked this advice up from one of our investors. He said, "Offer a $995/mo package and see what happens."

Within a week, we'd sold our first $995 package. This was for a B2B SaaS.

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any reason why it's 995 instead of 1000?

five bucks off!

I understand that...but when you are spending 1k does $5 really matter in that context?

I'm genuinely asking -

1. 999 - looks cheap

2. 998 - mmm..why not this?

3. 995 - nice number divisible by 5

4. 990 - well...why are we loosing $10 here?

5. 1000 - 4 digits might be considered expensive but 3 might not?

Trying to learn & understand selling to B2B.

The same psychological pricing cues also apply to businesses. After all - there's people making the purchase decisions and they're affected by this as much as anyone.

I don't think there is a logical answer to this question. Why is everything priced either 1 cent or 5 cents below round numbers (9.99 or 9.95 or 3.99 ...)? Human brain is weird I guess. It would be better logically if things are priced whole numbers (including tax) like 10, 50, 100. We don't have to worry about pennies and it will probably be easy for accounting purposes too.

One additional motivation is a historical approach to reduce losses due to employee theft. In a cash economy "rounder" numbers would make it easier for employees to take payment without having to ring up the transaction on the till. For example if a magazine was offered at a price of $5 the employee could simply ask for the $5 from the shopper who is more likely to have a $5 bill on hand, the exchange of goods for cash could then take place with the employee pocketing the money and the customer walking away having happily made he purchase (not necessarily aware of the employee's malfeasance). If the goods purchased are not nice round numbers, there is more of a likelihood that the customer will be more invested in the transaction being run up in order to get their change from the transaction.

Most of the purchase departments need one plus additional level approval for say 500, 1000 limits. So if you keep pricing at 999, the department purchasing your product need to go through one level less approval, hence chances of you as a vendor getting paid earlier is better.

Maybe sometimes. Purchasing cards sometimes have limits per line item, and you want to be able to slide under it as strictly less than comparison.

500 limit? $499

1000 limit? $995

While this could sound sketchy, business absolutely love it. If that monthly charge is $1000 or $1001, now I need another level of approval and signatures.

Starbucks pricing: Everything is in multiples of a nickel. Even at places that charge tax on top.

In a market I used to run a startup in, $1000 was a very common point in our industry at which individuals with purchasing authority and a credit card (i.e: the people we wanted to convince to hit Buy Now) needed to go up to the next level for expenditure approval.

$999 (or in this case $995) meant they could whack it on their card and not go through approvals process etc.

Obviously this price point will vary with industry and time, so suss it out in your industry (if it is applicable at all).

Completely agree with this, $5 can be the difference between a middle manager swiping a credit card and a tough conversation with a GM and procurement (ever had to procure AdWords before?)

And, although in these days of Stripe & PayPal, etc, it's not such a big deal, the ability to take credit cards for bills is the difference between being paid immediately vs. waiting 6-9 months for the invoice to be paid because you're not an Approved Supplier and Purchasing needs to get a waiver to pay you.

Psychological pricing: https://en.wikipedia.org/wiki/Psychological_pricing

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