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Tried-and-True or Just Plain Blah?

September 16, 2009  

Everywhere we look, ever since we can remember, we see that price ending: .99.

But does using this just-below-a-round-number pricing system always produce optimum results for merchants? Might other pricing options produce better results?

Some researchers recently took a fresh look at pricing, and their results suggest it may be time for marketers to rethink how they present price options to their customers.

In one experiment, a group of consumers was offered the choice of two pens—Pen A (lower-priced) and Pen B (higher-priced). The researchers mixed up the price endings (.99 or .00) to create different pricing options for different groups of participants: $1.99 and $3.00 (a just-below and round combination); $2.00 and $2.99 (round and just-below combination); $2.00 and $3.00 (round pricing); and $1.99 and $2.99 (just-below pricing). The results:

The widest digit spread pushed the lower-priced pen. The "highest share for the lower-priced pen (81.7%) occurred in the condition in which the difference between the leftmost price digits was the greatest ($1.99 and $3.00)."

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