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What´S Odd End Pricing? Essay

945 words - 4 pages

Odd- end pricing is another pricing strategy that is used by many retailers. Odd-end pricing is the “ubiquitous practice of expressing a price so that it falls just below a round number” (Harris and Bray). In other words it is the technique of pricing items with an ending of nine versus using a solid, round number. Consumers are “alleged susceptibility to “price illusion” (Huston and Kamdar, 1996). This price illusion is what many experts consider the illusion that business give to the consumer that because a price ends with .99 on the price tag it is pricing is consider to be less. The history of odd-ending pricing became present with the invention of the cash register, many business ...view middle of the document...

Consequently, consumers believe that they are paying a significantly less price versus a supposedly more expensive solid numbered price. Furthermore, it has been proven that “people focus more on the left-most digit" (Rutgers University, 2011 ).The left most digit theory reveals that consumers will pay more attention to the first few digits of a price and not pay attention to the rest of the price. This theory suggests that pricing a number at $24.99 is better than $25 because it will manipulate the consumer into that believing that he or she is paying less money. Research reveals that consumers round odd prices down. (Kinard, Capella and Bonner 2013) Strategies such as odd-end pricing are believed to benefit more retailers than consumers due to the increased sales of using odd-end prices.
In some cases, odd-end pricing is not effective. According to one consumer, odd ending pricing equated to bad or low quality. (Rutgers University 2011) Also, consumers felt that when purchasing items of high price or luxury such as high price cars, jewelry or houses items should be priced with a solid, straight forward number. (Rutgers University 2011) Ending a price with nine could possibly steer consumers away from purchasing an item because like stated earlier, people tend to pay attention to the first digits in a price, therefore when purchasing an item with a high price the consumer will want to know the exact price and not have to add in the nunbers after the decimal. Also, studies have been conducted to show that consumers are now rounding prices to even numbers for easier transactions and payments. For instance, at gas pumps, some people round gas prices to an even number to calculate the best gas...

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