Tests by Uber have shown we’re more likely to accept a surge price of 2.1x than 2x. The reason lies in our distrust of round numbers - we assume they’ve been simply marked up to get more money out of us. On the other hand, precise numbers feel like there's some kind of hidden logic or maths behind them. Even if we don't know how they came to be, they feel less arbitrary than a round number, and so, are more believable.
This is backed up by a 2008 study from Chris Janiszewski and Dan Uy at the University of Florida.
They showed participants prices for different goods. Some saw rounded prices (e.g. $5), while others saw precise ones (e.g. $5.15). People invariably thought the round prices were marked up more.
Then they ran a real world test by analysing 25,564 house sales in Florida. They found that sellers who requested a more precise price (e.g. $799,499 vs $800,000) got much closer to their asking price.
Now back to surge pricing. When Uber customers had to manually accept or reject a higher fare, a precise surge price (2.1x) was chosen more often than a rounded one (2x). Knowingly or not, Keith Chen, then head of economic research at Uber, used the behavioural science explanation:
"When you tell someone, your trip is going to be two times more than it normally costs, they think, wow, that’s capricious and unfair… Whereas if you say, your trip is going to be 2.1 times more than normal then there must be some smart algorithm in the background here that’s at work. It doesn’t seem quite as unfair.”
So when pricing your offering, opt for precise over rounded numbers. Even if the precise price is a bit higher than the rounded one, it will look more credible, helping to boost purchase intent.
And if you’re curious about how Uber applied two other behavioural biases to get to the top, have a read of my new @MarketingWeekEd article from my monthly “Why it Works” column.
Here's the link: https://t.co/Iie7nUcjMU
🚨 Why is $AAOI up 10%+ today?
The whole bear case fits in one sentence: DEMAND is real, but they can’t build enough SUPPLY.
This morning they broke ground on nearly 400,000 sq ft of new manufacturing in Pearland, Texas. That’s on top of 210K already under construction in Sugar Land and 154K leased at Blue Ridge. Stated target: up to 700,000 units of 800G and 1.6T transceivers per month in Houston, with laser fab capacity up ~350% by end of 2027.
$324M+ of hyperscale orders landed in March and April. Today’s news is the answer to whether they can ship them.
The bear case was supply. Supply is now a construction site with a completion date. ✅
Realistic ledger: heavy capex, and execution has to hold. But “they can’t scale” stopped being a thesis this morning. ✅
Long 🟠 $AAOI
@Tayy_Richh187@midascabal Details of my stock holdings
Many of my Twitter followers have already joined my WatsApp.
During trading hours I share my watchlist and some strategies I’m watching 📊
👇 Details link
https://t.co/7D3DqP3KOk
@Tayy_Richh187@midascabal Details of my stock holdings
Many of my Twitter followers have already joined my WatsApp.
During trading hours I share my watchlist and some strategies I’m watching 📊
👇 Details link
https://t.co/7D3DqP3KOk
@midascabal Details of my stock holdings
Many of my Twitter followers have already joined my WatsApp.
During trading hours I share my watchlist and some strategies I’m watching 📊
👇 Details link
https://t.co/7D3DqP3KOk
@KFelt_ The great thing is that the community is still here, alive and well, despite everything. Aegis and Prism and the LoR Never Dies community are carrying the torch, we're developing Chrono, we go again and again.
@RealPrismsword@JasonFleurant Thanks for writing this, Prism.
Not very active on Twitter but I'm one of the devs working on Chrono.
Jason is a provocateur on X but the convo on Discord was positive, and helpful. And three community art pieces popped up tonight. Here's a spooky guy I drew. Happy to talk more.
@AikadoLoR It feels like a mechanic they keep including just to cater to that outlier player on the bell curve who just loves the RNG. They always keep the spectrum of player types in mind, Mark Rosewater loves to talk about it.