This week I thought a quick return to pricing. Does the 99p price work?
The story goes that it originated with the introduction of cash registers. Shopkeepers realized that if they added a 99c (in the UK we used shillings and pence, if you are too young to remember you will have to google it) to the price instead of a round amount then cashiers would have to ring up a sale on the cash register to give change. Hence for a loss of 1c per item they would reduce employees chances of pocketing the money.
This at least sound plausible although there is little evidence. The real question though is: Does it make people more likely to buy at £9.99 than £10? Good question and one that psychologists have had a look at. It appears that people do perceive a £9.99 as in a different price bracket to £10 so this will help the sale and this is often without people realizing that they are doing it.
However, if you are getting people to choose between different items in (say) your restaurant then this effect could be counter productive inducing them to buy the cheaper item. You often see this in restaurants and gastro pubs where they mark up in round pounds (although I think some of them might just be being trendy).
What do you think? Does it work for you? Have you tried one against the other? Theories are all very well but the real world will always have the final say! Let me know (don’t reply to this, email me at paul@pgsaccountancy.co.uk and put the blog title in the subject line so I know it’s not spam)
Have a great Easter (hope the weather picks up)
Paul