A friend of mine is a licensed Justice of the Peace. He performs weddings throughout the year, and from what I hear, he’s pretty amazing at it. He doesn’t just go through the motions, but he creates a special ceremony for couples.
The other day, he brought up an interesting conversation – pricing. He wondered the best way to charge for his services. He didn’t use specific numbers, but essentially, he charges $500, while another guy he knows charges $495 (or something along those lines – the point is the “00” versus the “95”). He asked two of us what we thought of that and which price we liked better.
Even though $495 is clearly cheaper, I immediately said $500. Why? Because to me, charging $495 felt like the person was trying to be tricky. “No, I don’t charge five-hundred dollars! See, the number is in the four-hundred dollar range! Four, not five!” When really, there’s not a whole lot of difference between $495 and $500, especially when you’re considering it among all the other costs of a wedding. To me, $495 is what you pay a salesman. $500 just feels like a standard rate that someone is charging me.
I can’t explain it. In theory, I would prefer to save $5 whenever possible, but I was immediately skeptical of this person charging $495. Why does he need to use such tricks to get me to hire him? The guy charging $500 is clearly stating his price. He’s not using any technique to make me think he’s charging less. He has set his rate and that’s that. And when it comes to something like performing my wedding, I don’t want someone who is trying to be sneaky with their pricing. Because I’m not concerned about the price, I’m concerned about the ceremony that the person will perform.
Thoughts?
Megan is a 30-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.
Instinctively, I want to save $5. So I’d go $495.
But now that you mention that $500 thing… I’m going to think twice.
With that being said, if it was $500 and it was a $5 DISCOUNT on services, would it be more enticing than $495? OR worse?
Personally, I think a $5 discount on a $500 service is kind of insulting. If it were a coupon for a product, or even a coupon at some sort of chain service provider (like if I have a $5 off coupon for an auto mechanic – designed to lure me in for an oil change, but then I use it on some major work instead), I would feel different, but it just feels a little sleezy. The sort of think the stereotypical sleezebag movie character used-car salesman would do.
I agree that the $495 just seems kind of silly. If you pay him with 5 $100 bills, is he going to look for change? Or do the already stressed out bride and groom gave to search for change? $500 just seems like less of a hassle. Plus, a 1% discount is kind of ridiculous.
I think it depends on the situation. If you actually sit and think about why someone is charging what they’re charging, you may come to a different conclusion than if you do what most people do — instinctively just go with whichever one “sounds best”.