Rule Of 100

Rule Of 100

The way a promotion is framed as money or as a percentage-off affects how big the discount seems.

Researchers find that whether a discount seems larger as money or percentage-off depends on the original price. For low-priced products, like books or groceries, price reductions seem more significant when they are framed in percentage terms. Twenty percent off that $25 shirt seems like a better deal than $5 off.

For high-priced products, the opposite is true. For things like laptops or other big-ticket items, framing price reductions in dollar terms (rather than percentage terms) makes them seem like a better offer. The laptop seems like a better deal when it is $200 off rather than 10% off.

Rule Of 100

If the price is less than $100, use a percentage off. If the price is greater than $100, use a dollar amount off.

Equation:

Price < $100 = % off

Price > $100 = $ off

(photo via gerard stolk)