The Price-Perception Gap: Why Some Prices “Feel” Right (Even When They Make No Sense)

A few years ago, a small restaurant tested two versions of its menu. Everything was identical—same dishes, same descriptions—but one small detail changed:

• In Version A, prices were listed as $12.00

• In Version B, prices were listed as 12 (no dollar sign, no decimal)

Sales went up in Version B. Why? Because the absence of dollar signs made people feel like they were spending less—even though the numbers were exactly the same.

This is the Price-Perception Gap—the way customers emotionally interpret price, often in ways that don’t align with logic.

Most businesses assume that pricing is about numbers. In reality, it’s about perception. Customers don’t just see a price; they feel a price.

And sometimes, those feelings override logic. According to research, subtle price formatting changes—like removing commas, rounding numbers, or even adjusting font size—can make a price feel lower or higher without actually changing it.

Here are three ways small businesses can use this to their advantage:

1. Round numbers for luxury, precise numbers for value.

   • $50.00 feels more premium than $49.99 because rounded prices are processed more emotionally.

   • $49.76 feels like a bargain because precise numbers signal calculation and fairness.

2. Drop the dollar sign.

   • A study from Cornell found that restaurants without dollar signs on menus increased spending because the “$” triggers pain associated with spending money.

3. Use “charm pricing” (but strategically).

   • Prices ending in .99 suggest value and deals.

   • Prices ending in .00 suggest quality and confidence.

   • If a product is premium, rounding up might actually increase sales.

Most businesses assume pricing is a math problem. But in reality, it’s a psychology problem.

So, take a look at your pricing. Is it logically optimized? Or is it emotionally optimized?

Because sometimes, the right price isn’t the lowest one—it’s the one that feels right.

How do consumers in your category “feel” about price? Let’s find out together!