What is the significance of the last 2 digits of a price to a retailer?

Question

I'm taking a marketing class and need to find out how a retailer tracks inventory and such by the last 2 digits of a price. I'm not refering to psychological or odd pricing. The example the professor used in class was say the price is $9.87, the 87 might mean discontinued item to the retailer, or 5.34 might mean slow seller don't restock. I've searched everywhere on the web. I think these are probably retailer specific. Any information that can be provided would be greatly appreciated.

Leslie N

Answer 1

Yes, there are codes that retailers use, but it isn't a uniform code. Each is free to make their own house rules. Often a '99' means a sale item, no return. '89' is sale item, can be returned.
But if the retailer lives in New Zealand, the last digit has a special meaning, as they don't use pennies in their change - just round it up or down, so an item ending in a '3' or '4' would be charged 5 cents, an item ending in a '1' or '2' would be chaged zero - similarily, something that was priced at a number ending in '6' or '7' cents would be rung up as though the last digit was '5' while something that was '8' or '9' would be rung up to the next '00' number. I believe Australia also uses this system. It rids the retailers of the problem of dealing with pennies, and gives the government a break as well, as it costs more to produce a penny than it is worth. And the rounding off averages out.

Answer 2

Frankly, I haven't heard or read of any retailer using such a system.

In fact, it appears rather convoluted to me. Why mess with the price tag when it's so easy to simply keep track of inventory and aged inventory using a computerised Management Information System (MIS)?

All the retailer has to do is make decisions based on the age of the inventory, expressed in hours, days, months (and maybe years, though I don't see retailers holding on to inventory for years).

Might this be a trick question posed by the professor?

Answer 3

That theory is probably older than the internet, which is why you can't find any reference to it. It is older than personal computers too, with the ease of tracking and pricing items via computer, why bother teaching such outdated drivel, really! The important thing to remember how you want to price things, this is what you should be taught, not yesterday's medieval ways. Unless, of course, you are taking a marketing history class, nah, not even then! Is this a marketing trivia class perhaps?

Answer 4

Hi Leslie.

Many retailers do not have adequate systems to track how much of which items are selling at regular price vs markdown so they use different price endings to help track this.
I worked at GAP for many years and regular price had a .00 ending, markdowns had a .99 ending and then the final price had .97 ending. These price endings could then be queried in the system and added up so we could see how many sales and how much inventory were in each category.

Hope that helps.

Answer 5

I use to be a salesperson at a car dealership, and if the last two numbers in the price of a used car were odd and an even, then the car did not have alot of profit in it. But if the car had two odd numbers like 99 it had decent to great profit.