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)."
The widest digit spread also pushed the higher-priced pen. "Presenting the lower-priced pen with a round ending and the higher-priced pen with a just-below ending ($2.00 and $2.99)" resulted in more sales of the higher-priced pen than any of the other pricing options.
Matching price endings produced more blah results. Using the tried-and-true combo of just-below numbers ($1.99 and $2.99), and even round numbers ($2.00 and $3.00), favored the lower-priced pen, but produced less significant results than the other digit spreads.
The Po!nt: It's time to mix things up. Try using a unique combo of round and just-below prices to push a product you want to move off the shelf. You may see some interesting results!
Source: "Price Endings, Left-Digit Effects, and Choice," by Kenneth C. Manning and David E. Sprott. Journal of Consumer Research, 2009.
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