Week Six; So I saved a penny?

 

When did even/odd pricing start?  I found two possible explanations:

One story is that it forced the cashier to open the cash register to give change. By pricing an item at $4.75 or 49.95, the cashier would need to access change and open the register, which recorded the sale. Otherwise the cashier could potentially put the $5 or $50 in their pocket without opening the register.

Another story is that in the early 1900s, JCPenney conducted a pricing study and concluded that people perceive a deal when the price ends in 7, 8, or 9 and that the odd number creates a sense of urgency to purchase.  

Because I love all things sociological and psychological, I had to ask: But, why?

An odd price ending conveys the impression of a discounted price. Consumers tend to pay attention to the first digit of a price, so reducing a product from $3.00 to $2.99 will be perceived as a value and lead to 10% to 30% higher sales.

Odd pricing also gives the illusion that the price is honest since the number is so specific, such as a 9 or a 5.

An even price ending gives the exact opposite impression of an odd price. Prices ending in 0, such as $100, denote accuracy, simplicity and often, premium. Buynomics

I immediately thought of Walmart’s rollback pricing strategy and came across this article: Pricing Insight: Walmart

From the article, one of Walmart's core strategies is "Low Price Leadership" and it specifically targets offering goods and services at lower prices than its competitors.  

Walmart's pricing strategies include: 

• Rollback Pricing - A tactic that sees the retailer offer temporary discounts on select items over peak seasons such as back-to-school and the holidays.
• Everyday Low Prices (EDLP) - Walmart opts for smaller margins per item, trading them off in exchange for higher overall profit margins derived from increased sales volumes.
• Price Matching Policy - By refusing to match competitors’ prices, Walmart conveys its confidence in its quality and affordability, ensuring customers are getting the best possible deal.
• Multiple Discounts - Offer customers multiple discounts to ensure their prices are always the lowest. This strategy has proven successful in attracting shoppers and driving sales growth.

I wish I could say I am immune to pricing strategies, but I will buy something additional (that I don't need) just to get free shipping, even when that item costs more than the shipping cost.