Does the $ sign reduce sales?

For years the conventional wisdom for the pricing of goods has been to drop a cent. Customers, or so the theory goes, will respond much more eagerly is the price of the item is 19.99 rather than simply 20.00. Once this theory was set into practice it has become the standard. No one really tinkers with this formula, save for Wal-mart dropping one or two cents or governments musing about dropping the penny from circulation. And, certainly no one questions that retail prices should always be preceded with the ubiquitous $ sign right?

Well now comes a study from a research team at Cornell University that tested how consumer spending patterns changed depending on the $ sign included or not.

Trying to determine is there is any difference in customer purchasing activity the team created three different menus at a nearby restaurant. One included the $ sign and price, one with no dollar sign and a third with the price written as words. Testing their menus on 201 lunch goers they discovered that customers spent more when the price was listed without a $ sign than with.

One theory for this behavior is the thought that including a $ or the scripted word "dollar" created a mind set of "pain in paying" for the customer and was a repetitious sub conscious cue that they were parting with real money causing them to spend less.

Although this test was focused in a restaurant it stands to reason that the same principle would apply in any location that priced products individually. That by removing the Dollar sign would create higher customer purchases since no visual cue that they are spending money is present.

It;s an interesting theory and one that deserves some more study to be sure, but in these tight economic times it seems to me a worthwhile exercise for retailers to try out in an effort to convert more browsers to buyers.

Who really needs the dollar sign anyway?