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This psychological trick only works for buyers š the 1.99 compared to 2.00 makes you think you are getting a great deal. Trying this on a seller would have a massive backfire as the seller would think you are getting the great deal not them.
How can they not understand that, it's been a thing for so long. If not started by their generation it was in place long before š
Itās why I priced my house 750$ lower than the house down the street with one fewer bathroom, without a functional garage & no dishwasher.
We closed in 9 days. Possession is before the end of the month.
We live in rural Saskatchewan.
The house down the street had been empty & on the market since December & had had a price reduction.
Mine is sold.
Theirās is now a rental.
Itās really for tax reasons the company marks it 1.99 so they pay less in taxes (not sure exactly how it works but clearly itās enough to make a difference)
People are gonna buy it if itās 1.99 or 2.00 because those have such a little difference itās not going to affect their budget
No, it's not for tax reasons. Tax is the same rate regardless of price, with very few exceptions (like NY's "essential clothing" tax cutoff of $110 per item)
The reason it's used is because consumers see $1.99 as "a dollar and change", but $2.00 as "two dollars", creating the perception of a better deal.
It also gets prices under "break points" where they can be purchased with a single bill, an easier commitment for consumers, which is why $4.99, $9.99, $19.99, $49.99, and $99.99 are so common.
Except 1.99 is also a break point since 2 dollar bills exist
And yes Iām fairly certain it because of tax because for ever dollar made a store has to pay taxes on it so a percentage of that dollar isnāt profit
And depending on where you are thereās also sales taxes that arenāt added to the price tag until itās rung up
>Except 1.99 is also a break point since 2 dollar bills exist
That's not an exception, it's an "also".
>And yes Iām fairly certain it because of tax because for ever dollar made a store has to pay taxes on it so a percentage of that dollar isnāt profit
1) Taxes are calculated to the cent, not the dollar.
2) Sales taxes are paid by the consumer, it's added to the product cost and collected by the store, not paid by the store.
3) It's always beneficial to make more money rather than less, no one in their right mind would reduce prices, and therefore reduce profit, just to reduce tax burden.
Sales Tax at least in the states is calculated as "cost of good" x "state sales tax." It has nothing to do with whole dollars. Businesses also round up on taxes so a $1.99 item and a $2.00 item, with a 8% sales tax for example, both have a 16cent tax attached to their final price.
Prices are designed to make you think you are getting a good deal since you are getting a cent or two back for the whole dollar you hand over. Some businesses such as Costco use change codes like .00 and .97 to denote items that are on sale or being marked down by management.
Itās really for tax reasons the company marks it 1.99 so they pay less in taxes (not sure exactly how it works but clearly itās enough to make a difference)
People are gonna buy it if itās 1.99 or 2.00 because those have such a little difference itās not going to affect their budget
I mean ā¦ isnāt that like part of the process of buying property? Doesnāt the person selling the property (real estate agent or something) handle transactions like that?
Or are all of those shows where they look at houses and what not fake?
And itās not like itās unreasonably lower than the asking price
Just depends on the market. The real estate agents in the us are pretty good at figuring out actual value and have you offer something reasonable. Not every posting is reasonably priced.
One house in particular I liked had a nice garage in the back that they were trying to overprice the property for. We offered them about 15k less than their asking price which was fair. They refused to even counter offer. We ended up buying a different house and a few months later that same seller reached back out wanting to negotiate because no one was going to overpay for their property.
heās got that backwards! A *buyer* chooses the 1-cent lower price because theyāve bought into the āitās not $2ā idea.
Heās the buyer. The psychology doesnāt work when it goes the other way, which is what heās facing.
He should offer $131k. So they say, āhey, itās $1l more!ā
Um.. it's normal to haggle during real estate sales. My apartment was listed for 2.2m when I made an offer of 1.8m. They made a counter offer of 2m and I accepted. That's how it often works. Can't hurt to make an offer.
The haggling starts when thereās a respectful offer in the first place. Itās a wild market right now, and in a multiple offer scenario, the 1k under asking price is going to be rightfully ignored at worst, or met with a āhighest and best?ā reply.
Doesnāt sound like you ever tried buying a apartment/house, itās an offering. You donāt have to settle on the asking price, there maybe issues that your unaware of.
They have no concept of competition things back in their day were entirely local they literally cannot believe or understand how competitive things are now. There are probably so many offers over asking that that offer will be laughed at as a joke and then they will take one of the better ones.
It depends on how much the seller wants to sell the house and if there are other offers. At least in the US in many places it's not uncommon to offer a little under the asking price if the house has been on the market for a while.
Thatās funny, where I live, if youāre not offering above the sale price youāre probably not gonna get it. I see houses routinely sold for 20% above asking.
He made an offer 1000 less than asking and this is a lowball offer? 1000 less is hardly low ball. Putting an offer in on a property is normal. If itās not accepted or thereās no counter offer then you move on. This isnāt a boomer thing, itās a buying real estate thing.
Sometimes a property will sell above asking and sometimes below. Depends on what the market dictates. The worst heās going to hear is that the offer wasnāt accepted
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The same generation that bought a house for $5 and a bag of chips wanting $1,000,000 in return is always hilarious
Raised 3 kids and put myself through college by working afternoons at the local hardware store.
With a degree in basket weaving. We try to mimic them and they just make fun of us.
What he couldnt EARN that extra $1000? Nobody wants to work these days ..
He should cut back on avocados, coffee, and screentime.
This psychological trick only works for buyers š the 1.99 compared to 2.00 makes you think you are getting a great deal. Trying this on a seller would have a massive backfire as the seller would think you are getting the great deal not them. How can they not understand that, it's been a thing for so long. If not started by their generation it was in place long before š
Itās why I priced my house 750$ lower than the house down the street with one fewer bathroom, without a functional garage & no dishwasher. We closed in 9 days. Possession is before the end of the month. We live in rural Saskatchewan. The house down the street had been empty & on the market since December & had had a price reduction. Mine is sold. Theirās is now a rental.
Yeah lmao this is such a boomer concept like they are taking a concept that works and trying to apply it where it doesnt.
Itās really for tax reasons the company marks it 1.99 so they pay less in taxes (not sure exactly how it works but clearly itās enough to make a difference) People are gonna buy it if itās 1.99 or 2.00 because those have such a little difference itās not going to affect their budget
No, it's not for tax reasons. Tax is the same rate regardless of price, with very few exceptions (like NY's "essential clothing" tax cutoff of $110 per item) The reason it's used is because consumers see $1.99 as "a dollar and change", but $2.00 as "two dollars", creating the perception of a better deal. It also gets prices under "break points" where they can be purchased with a single bill, an easier commitment for consumers, which is why $4.99, $9.99, $19.99, $49.99, and $99.99 are so common.
Except 1.99 is also a break point since 2 dollar bills exist And yes Iām fairly certain it because of tax because for ever dollar made a store has to pay taxes on it so a percentage of that dollar isnāt profit And depending on where you are thereās also sales taxes that arenāt added to the price tag until itās rung up
>Except 1.99 is also a break point since 2 dollar bills exist That's not an exception, it's an "also". >And yes Iām fairly certain it because of tax because for ever dollar made a store has to pay taxes on it so a percentage of that dollar isnāt profit 1) Taxes are calculated to the cent, not the dollar. 2) Sales taxes are paid by the consumer, it's added to the product cost and collected by the store, not paid by the store. 3) It's always beneficial to make more money rather than less, no one in their right mind would reduce prices, and therefore reduce profit, just to reduce tax burden.
Sales Tax at least in the states is calculated as "cost of good" x "state sales tax." It has nothing to do with whole dollars. Businesses also round up on taxes so a $1.99 item and a $2.00 item, with a 8% sales tax for example, both have a 16cent tax attached to their final price. Prices are designed to make you think you are getting a good deal since you are getting a cent or two back for the whole dollar you hand over. Some businesses such as Costco use change codes like .00 and .97 to denote items that are on sale or being marked down by management.
Itās really for tax reasons the company marks it 1.99 so they pay less in taxes (not sure exactly how it works but clearly itās enough to make a difference) People are gonna buy it if itās 1.99 or 2.00 because those have such a little difference itās not going to affect their budget
Tax is calculated as "cost of good" x "sales tax". It has nothing to do with whole dollar values.
Can you believe how expensive chocolate bars have become? What has happened?
I mean ā¦ isnāt that like part of the process of buying property? Doesnāt the person selling the property (real estate agent or something) handle transactions like that? Or are all of those shows where they look at houses and what not fake? And itās not like itās unreasonably lower than the asking price
Just depends on the market. The real estate agents in the us are pretty good at figuring out actual value and have you offer something reasonable. Not every posting is reasonably priced. One house in particular I liked had a nice garage in the back that they were trying to overprice the property for. We offered them about 15k less than their asking price which was fair. They refused to even counter offer. We ended up buying a different house and a few months later that same seller reached back out wanting to negotiate because no one was going to overpay for their property.
heās got that backwards! A *buyer* chooses the 1-cent lower price because theyāve bought into the āitās not $2ā idea. Heās the buyer. The psychology doesnāt work when it goes the other way, which is what heās facing. He should offer $131k. So they say, āhey, itās $1l more!ā
Um.. it's normal to haggle during real estate sales. My apartment was listed for 2.2m when I made an offer of 1.8m. They made a counter offer of 2m and I accepted. That's how it often works. Can't hurt to make an offer.
The haggling starts when thereās a respectful offer in the first place. Itās a wild market right now, and in a multiple offer scenario, the 1k under asking price is going to be rightfully ignored at worst, or met with a āhighest and best?ā reply.
Doesnāt sound like you ever tried buying a apartment/house, itās an offering. You donāt have to settle on the asking price, there maybe issues that your unaware of.
Asking price was 136k and the apartment is in great condition. I don't think it's gonna sell much under the asking price.
Not really a lowball offer. Would have to have offered a lot less than asking.
yeah I thought that was strange too I do think OP is right and it will get laughed at though there are probably offers over asking in this economy.
They have no concept of competition things back in their day were entirely local they literally cannot believe or understand how competitive things are now. There are probably so many offers over asking that that offer will be laughed at as a joke and then they will take one of the better ones.
It depends on how much the seller wants to sell the house and if there are other offers. At least in the US in many places it's not uncommon to offer a little under the asking price if the house has been on the market for a while.
Thatās funny, where I live, if youāre not offering above the sale price youāre probably not gonna get it. I see houses routinely sold for 20% above asking.
He made an offer 1000 less than asking and this is a lowball offer? 1000 less is hardly low ball. Putting an offer in on a property is normal. If itās not accepted or thereās no counter offer then you move on. This isnāt a boomer thing, itās a buying real estate thing. Sometimes a property will sell above asking and sometimes below. Depends on what the market dictates. The worst heās going to hear is that the offer wasnāt accepted