It's been a couple of decades since I last lived in the UK but I remember quite well that Marks & Spencer had rounded pricing (no .99 deception). I wonder if they kept it up and if they are still doing well over there.
People spend more when prices end in .99 (2018)
31–40 of 210 posts
Re: People spend more when prices end in .99 (2018)
#32Actually, the .99 price-point started as a clever way to prevent theft, manage inventory, and keep track of sales. The idea was that pricing something at $1.00 might tempt a cashier to pocket the bill, but pricing it at $0.99 meant they’d have to open the register to give change, reducing the risk. Back then, most registers didn’t print receipts. This method also helped with inventory control. For example, if the tot…
> This method also helped with inventory control. For example, if the total sales for the day ended in .56, it meant 44 (or 144) items were sold, no matter how many customers bought them.
That seems like bollocks, who cares about a technique for tracking total number of any items sold? That isn't helpful for inventory management at all? And even if you had only a single product, or you totalled sales separately for some reason (and inexplicably by sale price rather than just tallying sales), you could then just divide by the price, you don't need to coerce the total into being a tally mod 100.
Re: People spend more when prices end in .99 (2018)
#33I never like thinking of pricing in this way. When you price something as $9.99, you're signaling to your customer that you're trying to manipulate them. Whereas a flat $10 is honest. Integrity means a lot. The software I sell is priced in whole numbers. However, the magnitude of effect claimed in the article is huge. It's the difference between selling at cost and a huge margin. Between doing well and shutting down…
Retailers don't do this because of published studies. They do it because they've tested it internally for the last 40 years.
Sure but should we believe that internal studies at retail chains are quality scientific studies?
Re: People spend more when prices end in .99 (2018)
#34First job for all day AR glasses is to kill off this nonsense. Superimpose the rounded up price and blur the advertising out. Also add the markup so the customer knows that $2 Arizona iced tea was bought for 35c.
Actual first job for all day AR glasses will be to spam you with ads everywhere.
See Hyper Reality: https://www.youtube.com/watch?v=YJg02ivYzSs
Re: People spend more when prices end in .99 (2018)
#35I didn't see it mentioned, but there's sometimes another factor: When a store is selling things for .00 vs. ".99" (or any other fractional amount), I assume it's a premium-priced store. They sure aren't rounding down to those numbers. (Or, many times when I see .00 numbers, it's slightly upscale clothing stores, who're maybe using .00 to seem more upscale, but who also have near-constant significant "sales". So if I…
> premium-priced
I've seen this on menus and wine menus that write prices like 5 or 4.5 -- everything rounded to 50¢ or $1 -- I think trying to appear upmarket.
Re: People spend more when prices end in .99 (2018)
#36I never like thinking of pricing in this way. When you price something as $9.99, you're signaling to your customer that you're trying to manipulate them. Whereas a flat $10 is honest. Integrity means a lot. The software I sell is priced in whole numbers. However, the magnitude of effect claimed in the article is huge. It's the difference between selling at cost and a huge margin. Between doing well and shutting down…
> Integrity means a lot. Does it? Has anyone priced out the premium integrity can command? As anecdotally, it doesn’t seem to matter unless you have a sterling reputation. People with merely a good integrity reputation are better off selling it off until they are low ish integrity. And if you compete on price, may as well abandon it entirely.
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Re: People spend more when prices end in .99 (2018)
#37I never like thinking of pricing in this way. When you price something as $9.99, you're signaling to your customer that you're trying to manipulate them. Whereas a flat $10 is honest. Integrity means a lot. The software I sell is priced in whole numbers. However, the magnitude of effect claimed in the article is huge. It's the difference between selling at cost and a huge margin. Between doing well and shutting down…
This is just psychology.
Also everyone is doing this, and that’s a fact. If you do it differently, people will think there’s something wrong
Re: People spend more when prices end in .99 (2018)
#38McDonald's knew about this many years before 2018
I think everyone did...
(In fact the linked study - the link is broken, but it's available here [0] - is from 2003.)
[0] - https://www.kellogg.northwestern.edu/faculty/anderson_e/htm/...
Re: People spend more when prices end in .99 (2018)
#39Actually, the .99 price-point started as a clever way to prevent theft, manage inventory, and keep track of sales. The idea was that pricing something at $1.00 might tempt a cashier to pocket the bill, but pricing it at $0.99 meant they’d have to open the register to give change, reducing the risk. Back then, most registers didn’t print receipts. This method also helped with inventory control. For example, if the tot…
> Actually, the .99 price-point started as a clever way to prevent theft, manage inventory, and keep track of sales. The idea was that pricing something at $1.00 might tempt a cashier to pocket the bill, but pricing it at $0.99 meant they’d have to open the register to give change, reducing the risk. Back then, most registers didn’t print receipts.
Wouldn't the extra labor required offset any potential savings? (More time per transaction means you need to hire more cashiers to keep checkout line length down.)
Re: People spend more when prices end in .99 (2018)
#40Earlier quoted context omitted.
Something to keep in mind is the tactic is very old. Baby boomers were telling their children of this tactic. It is likely that boomers learned of it through their parents.
Certainly it’s been near-universal with gas pricing for pretty much forever to tack on 99/100. Any station that didn’t do it would have most people punishing it in a price comparison. Of course, pricing like $0.99 is extremely common more generally.
And just to be clear, gas prices tack on nine tenths of a cent, selling a gallon for, e.g., $3.999.