Tip # 175: Is It All in Their Heads?
An ever-increasing number of tenants are looking for rentals through online classified ads. These services compile hundreds of local listings in one easy-to-read list, and snazzy search functions make it easy for apartment-seekers to zero in on that perfect rental property.
But these services also create more competition among landlords. If you scroll through some of those competing rental ads, you might notice something interesting — many savvy landlords and property managers are using “psychological pricing.”
This pricing model is not new — you see it every day. It rests on the tested theory that consumers improperly round numbers. By simply dropping the rent $1 or $5 per month, you will create the perception of much greater value.
Odd-number pricing appears to the consumer to be more intentional and more fair — it is perceived as the lowest possible price.
The most successful numbers end in 9, 5, or 7, in order of consumer preference.
It is believed that consumers tend to round down a price rather than round up — $995 seems closer to $900 than to $1,000.
The result is attracting more customers — in this case, tenants — who are eager to grab up a bargain.
Dropping the rent by just $1 could result in lower advertising costs and fewer vacancies.
See last week’s Landlord Quick Tip.
American Apartment Owners Association offers discounts on products and services for landlords related to your rental housing investment, including rental forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.