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Pricing to the nines
Written by Amanda Ryder
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Marketers preach that 99 cents beats a dollar every time. But do customers really see the difference? The Globe and Mail’s Report of Business magazine recently featured a story that explored whether pricing to the 99’s was still effective.

The most often quoted thinking behind the original 99-cent pricing method was that people read from left to right. We hold the dollar amount of a price in our minds and ignore the digits after the decimal system. This means retailers can pocket an extra 99-cents without shoppers really realizing. The article also explored other potential reasons behind this concept.

The debate as to whether this is a tried and true tactic has been questioned for years with some studies proving it effective and others questioning it. In April, Walmart recently announced it was backing away from the 99-cent tactic and will start eliminating fractional prices. The company will instead round prices to even dollars – so $20.00 instead of $19.99.

We wanted to know: what are your thoughts on 99-cent pricing? Do you do it in your shops? Is it an effective marketing tool? Why or why not?

COMMENTS

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Written by Mary-Jane Posno on 2009-11-09 09:39:15
I'm so surprised you haven't had more discussion on this. 99 cent pricing has always driven me to distraction... Do we think our customer is that gullible?? Are we as customers that gullible?? 
Hardly!! Not only do we mentally "round up" , surely we all mentally add in the applicable taxes as well. At its worst it is deceptive, at its best it is silly.  
 
Mary-Jane Posno 
Poppies-the Island Florist, Victoria BC
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Written by Guest on 2009-09-12 10:41:11
I have a gift shop and have been rounding up to the full dollar amount for about a year or so. It seems to make no difference to my customers that they are spending an extra penny. I find that most people mentally round prices up anyway. 
 
Sherry Campbell 
Sherry's on Main
Written by Guest on 2009-10-06 13:19:18
I work in the floral department of a Loblaws in Ottawa, Ontario and I have found that when customers ask the price of an item and I reply "$3.99", almost all will reply "Oh, so $4.00, right?". So, it would seem that I am not the only one who finds it is easiest to round up by that one cent difference when I am shopping and keeping an eye on the price.
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Written by Guest on 2009-09-11 14:15:03
As a consumer, I hate the 99 cent pricing tactic. I automatically round the price up to the full dollar amount. As a result in my shop, I do not use the 99 cent pricing tactic at all. My clients seem to appreciate this.

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