Should you price a consumer product at a price that ends in 99 cents — or price it at a round dollar amount?
When setting a price for a consumer product, should you select a price that ends in 99 cents–or instead choose a round dollar amount?
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Should you price a consumer product at a price that ends in 99 cents — or price it at a round dollar amount?
When setting a price for a consumer product, should you select a price that ends in 99 cents–or instead choose a round dollar amount?
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4 Comments On: The Big Difference a Penny Makes
I agree that having rounded price points would convey quality & honesty, whether it is menu prices or industrial product pricing. However, I would add that “99 cents” or “95 cents” would work well in these instances: non-essentials, impulse purchases (desserts/ice creams), second tier or value-branded products, and could be tied in well with product branding & differentiation between multiple tiers of a brand.
A penny makes a huge difference. If you look at the price 999.99 or 1,000.00 you see more decimal places and it just looks more expensive. It is great that this study is applied to restaurants and hospitality but I believe all business owners could highly benefit from a .01 price adjustment.
Simplifying the digits tells me the owner is a sensible person who is not trying to confuse me. I expect their other decisions will be sensible, too.
Similarly, telling me that a gallon of milk contains 3785.41178 milliliters cannot possibly be accurate (surely they overfill the jug a bit), and the last 5 digits are purely annoying, confusing and useless unless I’m in a laboratory. It’s sort of akin to measuring the distance to the moon, accurate to one inch. It’s unnecessarily complex.
“We estimate our expenditures for next year will be $31,263,185,218.29″ exemplifies the difference between data and information. Accurate? Yes, to the penny. Useful? Somewhat. Likely to turn out to be correct? No way.
From practical experince on the “Rooms” side of hospitaltity, the $1 difference in price does make a difference.