The Widespread Use of Odd Pricing in the Retail Sector

Judith L. Holdershaw · Philip J. Gendall · Ron Garland

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Consumer Market Behavior and Pricing Decision-Making and Behavioral Economics Consumer Retail Behavior Studies

Abstract

All home-drop advertising material, and all advertising displayed in two free weekly newspapers, and the local daily (Manawatu Evening Standard) was analysed over a seven day period to identify the prevalence of odd pricing. Each advertisement was analysed on the basis of the right-most digit displayed. In other words, if cents endings were used, the analysis was based on the cents ending, regardless of the whole dollar amounts shown. In the case of whole dollar amounts, again the analysis was based on the last digit, or lowest dollar numeral. An analysis of 840 advertisements revealed that odd prices, in particular prices ending in the digit 9, clearly outnumbered all other price endings. In total, 87% of prices were defined as odd prices. Approximately 60% of prices ended in the digit 9, with a further 30% of prices ending in the digit Thus, approximately 90% of prices ended in either 9 or 5. Three digits (0, 5, 9) accounted for nearly 97% of price endings, with the remaining seven digits accounting for only slightly over 3%. Whatever pricing methods retailers use, there is a definite bias in favour of odd price endings.

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References

1985the Effect of Brand and Price Information on Subjective Product Evaluations 1996Increased consumer sales response though use of 99-ending prices 1989Effects of odd pricing on price recall 1982Memory and Markets, or Why Are You Paying $2.99 for a Widget?1977Pricing, Principles and Practices.1982Magic Numbers: Psychological Aspects of Menu Pricing 1965Does the "9 Fixation" in Retail Pricing Really Promote Sales?

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2007Are consumers heterogeneous in their preferences for odd and even prices? Findings from a choice-based conjoint study 1998Estimating the effect of odd pricing 2007Price endings and consumer segmentation 2004Consumers' perception of odd‐ending prices with the introduction of the Euro 2009Patterns of price endings used in US and Japanese price advertising 2010Price endings and tourism consumers’ price perceptions 2010A cross-category investigation into the effects of nine-ending pricing on brand choice

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