Several Aspects of Psychological Pricing: Empirical Evidence from some Austrian Retailers

Abstract

This empirical study concentrates on several aspects of price perceptions, especially on price endings, the first (non-zero) digit in a price, symbolic meanings, eye-catching sequences, and price cuts framed in percentage or euro terms and uses a descriptive design to determine the extent to which retailers of grocery, furniture, clothes, hardware, consumer electronics, and food apply these psychological pricing methods in Austria. Odd and even pricing are common practices for a wide range of prices. Remarkably, a low number of price points generate more than half of the sales for groceries and clothing. Benford’s law regarding first digits applies for furniture shops. The unlucky digit 4 appears less frequently in price endings in Chinese restaurants. The lucky number 9 is more frequently used on Chinese menus. Few retailers employ prices made up of digits that form a striking pattern. Finally, the lower the price cut, the more likely the discount gets promoted in terms of percentages off.

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