Why a Round Price Sounds Like a Decision

Imagine a private chef named Margot Delacroix who meets Mrs. Thackeray about cooking dinner for the family five nights a week. Before the meeting, Margot set her fee at $5,000 a month, with the groceries on top. In the car, $5,000 starts to sound like a lot. A figure just under it feels easier to say aloud.

So at the end of the meeting, she says, “It’s $4,950 a month, plus the groceries.” Mrs. Thackeray repeats the figure. “So there’s a little give in it,” she says. “Could you do $4,500?” Margot does not want to lose the job. “I could do $4,700,” she says. Mrs. Thackeray books her at $4,700, which is $300 a month less than Margot meant to charge.

Suppose instead that Margot says the fee she set. “It’s $5,000 a month, and the groceries are on top.” Then she stops. Mrs. Thackeray asks whether she could start the first week of November. Margot says that she could, and Mrs. Thackeray books her at $5,000.

Margot offered the same dinners both times. In the first version, $4,950 told Mrs. Thackeray that Margot had been trying to stay under $5,000. So Mrs. Thackeray asked how far under it would go. In the second version, $5,000 sounded like a price Margot had decided. All that was left was when to start.

A fee can be written in three ways. It can be a round figure, such as $5,000. It can sit a few dollars under one, such as $4,950. Or it can carry cents, such as $4,987.50. Here is what a client might conclude from each, and why the round figure is the one to use.

A fee just under a round figure sounds as if you need the sale

Many shops price their goods a dollar or a cent under a round figure. Some pricing advice tells service professionals to do the same. Your fee is different from a price on a shelf, because you say it to the client yourself.

Here is the course’s view. A fee a few dollars short of round tells the client that you feared the round figure was too much. A client can see that $50 off $5,000 changes almost nothing for either of you. So the only reason left for the $50 is that you hoped the lower figure would win you the job. A client who hears that hope can conclude that you need the sale. A professional who needs the sale is one they can bargain with.

That is why Mrs. Thackeray asked for $4,500. The $4,950 worked like a small discount that nobody asked for. Like any discount, it told her that the first price had room in it.

A fee with cents makes the client do the sum

Monica Wadhwa and Kuangjie Zhang studied how people respond to round and precise prices. Their study appeared in the Journal of Consumer Research in 2015. People take in a round price, such as $200, more easily than a precise one, such as $198.76. In their five studies, a round price led people to go by how the purchase felt. A precise price led them to think it through.

The researchers also found that each kind of price suited a different kind of purchase. A round price felt right when people were buying on feeling. A precise one felt right when they were buying on reasons. A client who hires someone to cook in their home or plan their daughter’s wedding usually decides on a feeling first. So a round fee suits the way that client decides.

A fee of $4,987.50 tells the client that it came out of a sum. A client who sees a sum starts to check it, piece by piece. A client who checks your price piece by piece has stopped taking it as a report on how good your work is.

A money coach changed every price on her website to a round figure

Claire Sweet is a money coach and financial planner in the UK. In October 2021, she wrote on her blog about prices that end in 7 or 9. Shops have long priced goods at 99p, she writes, “because they feel that £9.99 feels less than £10.” Online courses, products, and memberships at £97 or £47 are “all designed to make you feel like the price is lower than it is.”

“At one point I was happy to conform to pressure,” she writes. A few weeks before she wrote the post, she was adding up her sales quickly in her head. Round figures, she found, were much easier to add.

So she went onto her website and all her checkout pages and changed the prices, “so they all end now in round numbers.” She did not expect the few extra pounds to cost her any clients. “Anyone that joins my 1:1 programme and is happy to pay £5997 is also happy to pay £6000,” she writes. “That extra £3 makes NO difference to them whatsoever.”

She also says how the change felt to her. “I feel like I’m being more honest,” she writes.

Sweet’s reasons were honesty and easier sums, not what her clients would conclude, and she gives no figures for her bookings since. What carries over is the direction she rounded. She went up to the figure she meant to charge, because a client happy to pay £5,997 does not notice £3. So when you round a fee, round it up to the figure you meant.

A St. Louis designer says his fee as one round figure and leaves it there

Jacob Laws is an interior designer in St. Louis, Missouri. In 2020, he told Business of Home’s 50 States Project how he charges for his work. He sets one design fee for each project, based on its size and budget, instead of billing by the hour. He does it “because it was easier that way.”

He gave an example of how he says the fee. “If I say, ‘My fee for this project is $100,000,’ I can’t remember the last time someone was like, ‘Well, I’m not going to pay that,’” he said. If a client did push back, he would probably not take the project, because “that just sets the tone for the entire project.” His summary is short. “A price is what it is.”

The $100,000 is his example, not a quote for one project, and he does not talk about round figures as such. What carries over is the sentence itself. It holds one fee, as one round figure, said once. Say your own fee that way, and then stop and wait for the client.

A Marin agent priced a house just under $6 million and set a record

Not every expert avoids a price just under a round one, and one strong result came from exactly such a price. Tracy McLaughlin is a real estate agent who was then her firm’s top seller in Marin County, California. In 2018, she told Inman how she priced a house in San Anselmo. She looked at sales in Ross, one of Marin’s most expensive neighborhoods. Then she took off what the five miles or so between them would cost.

“I went to one of Marin’s most exclusive and expensive neighborhoods, Ross, and generated the price from home sales there,” she said. She “priced it at $5.995 million.” The house sold for $5.85 million. That was “a record that has still never been exceeded in that neighborhood.”

Measured against this lesson, McLaughlin’s price was an asking price for her client’s house. An asking price is where the bargaining starts, and this buyer paid less than the asking price. So a figure just under a round one fit a house that was meant to draw offers. Your fee is not an opening offer. It is the price you mean to be paid, so give it as a round figure.

Why sending the figure your spreadsheet gives you goes wrong

Imagine a tutor named Tobias Wren who prepares students for the SAT. Mr. Okafor asks him for a price for his son, Daniel, who takes the test in December. Tobias builds the price in a spreadsheet, with 13 sessions at $185 and $47.50 for the practice books. It is late, and he has a student at eight the next morning. So he pastes the total into his reply. “The term comes to $2,452.50,” he writes.

The next day, Mr. Okafor asks what the $47.50 is for. Then he asks whether Daniel could buy the books himself and skip the two sessions in Thanksgiving week. Tobias agrees, and the term comes down to $2,035.

Tobias set a fair price. His mistake was sending the figure his spreadsheet gave him. The cents told Mr. Okafor that the price was a sum, so Mr. Okafor took it apart, one piece at a time.

The version that works settles the fee before the reply goes out. Tobias rounds $2,452.50 up to $2,500 and includes the books. “The fee for the term is $2,500, with the practice books included,” he writes. Mr. Okafor asks which day Daniel would start. Tobias offers the first Tuesday in September, and Mr. Okafor books it.

Rounding up does not cost you the client

Many service professionals have heard that a price ending in 7 or 9 brings in more sales. So rounding a fee up can feel like giving sales away, or like charging more than you need to.

That advice comes from goods on a shelf or a checkout page, where a buyer glances at the price and moves on. A fee you say across a table is heard in full. Sweet’s view is that a client happy to pay £5,997 is just as happy to pay £6,000. Margot’s $50 did not win Mrs. Thackeray. It cost Margot $300 a month, because it told Mrs. Thackeray that the fee could move.

How to set and say a round fee

1. Write down every price you quote, from your website, your proposals, and what you say in meetings. Mark each one that sits a few dollars under a round figure or carries cents. For example, a photographer might find $2,995 for a family session on her website.
2. Change each marked price to the round figure you meant. When it sits a few dollars under, round it up. For example, the photographer’s $2,995 becomes $3,000.
3. When your costs add up to an uneven total, decide the fee before you send it. Round it to a figure you could say in one breath, such as $2,500 or $14,000. A client takes in a round figure most easily. For example, an event planner whose sums come to $13,860 can quote $14,000.
4. Write the fee the same way everywhere, with no cents. Then say it the way you would say any price, once and in one sentence. For example, a caterer can say, “It’s $9,000 for the dinner, with the staff included.”
5. Bill costs you pass on at what you paid, to the cent, under a separate heading from your fee. For example, a home organizer bills the shelving at the store’s price. Her fee for the three days stays one round figure.

Next: You will see how the first price a client hears becomes the one they measure every other price against.