Why do product sale prices end in an odd number?

Answer 1

It has to do with the value image for consumers. Odd pricing became common just after the invention of the cash register. At that time, employee theft was a troublesome problem, and it was thought that requiring clerks to ring up each transaction on this new device would reduce theft since it keeps a record of each transaction. But dishonest employees could simply continue to pocket the money while avoiding ringing up the transaction at all. Odd prices would force the salespeople to issue change, making it difficult to pocket the customer's payment without recording the sale. So Macy's New York began the practice of pricing products a few cents below even dollar amounts, and other large retailers soon followed suit.

Another explanation is that during the 19th century, British goods were thought to be of higher quality than American goods. Conversion of the British pound to American dollars usually resulted in an odd price. Before long, products with an odd price were associated with higher quality.

Ironically, the reverse seems to be true today. Odd pricing is more closely associated with discount products, and research shows that products priced in round dollar amounts carry a perception of higher quality. One study of a drug store chain found that rounding prices up to whole dollar amounts not only failed to affect sales, it had a positive effect on the store's image. It was estimated that the chain had been losing approximately $850,000 a year using odd prices. Many upscale restaurants now price their meals without any decimal place at all -- they simply show the even dollar price. This creates the psychological impression that their customers don't quibble over pennies -- pure snob appeal.

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Answer 2

There are many reasons given, but the most likely is the last listed:

1. Psychology- we hear an odd number, we are more likely to mentally 'round down'. The problem here is that most of us actually round up when thinking about the number. $9.99 is $10, not $9.

2. Keeping clerks honest. If the numbers end in pennies, the clerk has to open the till to make change, instead of pocketing it. This WAS a big concern before various safeguards were instituted.

3. Sales gimmick. A newspaperman supposedly conned some stores into 'reducing their prices' by a penny, supposedly for the first reason given, but in reality hoping more people would pick up his penny newspaper.

4. Competition. Sort of related to #1 again, but in the cut-throat pricing wars, a penny difference makes a difference in customer traffic. you see this often in gas prices.

5. Confuse customers. This theory is related to #1 as well. Here, the idea is that it makes it tougher for the customer to keep track of what they have spent, thus they will spend more. On the other hand, if they round and keep tabs, they get a small surprise bonus at the check-out- a win-win!

6. Tracking. This is not WHY they did it originally, but many stores now use the last number for tracking. Some stores use sale prices that end in an 8 or 7, for example. One chain uses a 9 normally, 7 for sales, and a 5 for clearance items.

7. (In my mind, the main reason) Tradition. They started doing so for one reason or another- price edge, to sell penny items easier, etc., and keep doing so out of sheer tradition. 'It works, why change?' thinking.

Answer 3

Retail prices are often expressed as odd prices: a little less than a round number, e.g. $19.99 or £6.95. Psychological pricing is a theory in marketing that these prices have a psychological impact that drives demand greater than would be expected if consumers were perfectly rational. Psychological pricing is one cause of price points.

The psychological pricing theory is based on one or more of the following hypotheses:

* Consumers ignore the least significant digits rather than do the proper rounding. Even though the cents are seen and not totally ignored, they may subconsciously be partially ignored. Some suggest that this effect may be enhanced when the cents are printed smaller: $1999.
* Fractional prices suggest to consumers that goods are marked at the lowest possible price.
* Now that consumers are used to psychological prices, other prices look odd.

The theory of psychological pricing is controversial. Some studies show that buyers, even young children, have a very sophisticated understanding of true cost and relative value and that, to the limits of the accuracy of the test, they behave rationally. Other researchers claim that this ignores the non-rational nature of the phenomenon and that acceptance of the theory requires belief in a subconscious level of thought processes, a belief that economic models tend to deny or ignore. Research using results from modern scanner data is mixed.

Answer 4

because you are opssive over the odd numbers?

Answer 5

A marketing illusion. You see $149.99, but your brain thinks $140.