February 4, 2022 - Have you noticed lately that most non-profit organizations solicit donations of only $19.00 per month? Being rather inquisitive about these important things, I delved into why organizations solicit like they do, just $19.00 per month. I wondered just why they did not go for the additional dollar and request $20.00 per month. Seems logical to me. Well, some research answered this question. There are two reasons: Federal Income Tax, and Customer Ignorance. Allow me to explain.
Let's look at the Federal Tax regulations first. These charities have an obligation to provide a receipt for an annual contribution of $250 or more. A $19 contribution across twelve months amounts to $228 which is less than the receipt-sending threshold. That relieves them of having to provide the receipt.
That leaves us with customer's ignorance about numbers. Why does $19 perform best? It's an odd number to our senses as compared to a nice, round number like $20. But, that strangeness makes viewers think longer about the ad they're seeing, which might be why the $19 was chosen. Psychologists who have studied this have concluded that using prices ending in the numbers 4, 7, and 9 are more likely to be successful than prices ending in 0 or a 5.
It has been discovered that it is not easy to do simple math with $19. If the number was $19.90 viewers could round that up to $20 anyway. And they would be able to quickly calculate that $20 a month to a hefty $240 a year. But, $19 times 12 might be more difficult to figure out. As a result, they are focused on the modest $19 amount instead of the yearly total of $228.
Goods in stores tend to be displayed at prices like $9.95 or $9.99, the reason being that instead of rounding up, people tend to ignore the cents, meaning that even though those prices are closer to $10, shoppers count them as a $9. This is a psychological trick to take advantage of the typical shopper's ignorance of the small units, and make them spend more. Let's imagine that you buy fifty items at the supermarket, and each one you under-estimate by almost $1. By the time you have put everything through the check-out, you've spent $50 more than you had calculated.
Similar tricks are used for higher priced items. A television costing $995 goes through the typical shopper's brain as $900 instead if $1,000. Also, a car costing $24,995 registers in the same buyer's brain as $24,000 instead if $25,000.
Now we know why charities that advertise on television, $19 seems to be the magic number that they use. I am old enough to remember the “it's less than a cup of coffee a day” requests from charities. Times are changing rapidly. I think that I will start a non-profit organization so that I can advertise for donations of only $19 per month. As P. T. Barnum used to say, “There's a sucker born every minute.”
