"Money is an idea"....

Hi Rick,

“Nonomania” … Or the “9-fetish”… Or in this case the 99 psychology in pricing.

Rick, since you have entered this thread in a more mature way than someone else who resorts to sarcasm bordering on personal attacks when opposing arguments are presented, I’ll re-enter this discussion.

BTW, I’m used to it by now, it used to be quite common when I posted on another “famous” board, however instead of “biting back”, I gave that person full credit in my much trafficked “Who’s who” list, and still do, even though he has technically retired from the net. I’m also used to sarcasm…. “R.C. Collins” did a fine job of that on a number of discussion boards recently ;-)

Okay… Let’s talk about Ted Nicholas….

Yes, Ted did do testing and research to find out if it made a difference in sales whether the price ended in 97 or 99.
And Yes, he proved that, in general, the people that bought from him and his clients were more inclined to buy a product ending in 97 than the same one ending in 99.

But strangely, few business people and retailers have taken his good advice?

Researchers discovered that the digits “one”, “three” and “seven” are the rarest price-endings and that the prevalence of prices ending with 99 is a purely a Western phenomenon. Chinese, Japanese and other Asian countries shy away from using “nines” in pricing.

Culturally, for many, many years, the Chinese did not use the digit nine for anything,” The “nine” was reserved for the emperor.” Chinese restaurants for instance, typically end menu prices with a six or an eight, digits that are also easier to add or subtract then odd numbers like nine.

The type of currency used in many Asian countries reinforces the reluctance to use nines. It takes so many yen or yuan to order a even just a meal in Japan or China that a single cent doesn’t mean as much as it does in the United states or Australia for example.

Did you know also that a lot of research has been done on the psychological effects “99 cent price endings” have with consumers?

For example, Ohio State University researchers have been studying consumers’ perceptions of 99-cent endings in restaurant pricing. They researched the effect menu prices had on consumers, in terms of prices ending in 99 as against “whole dollars”.

What they found was that although the one cent difference may not be valued very highly by itself, when it is part of a price on a menu, it can be worth a lot in terms of a customer’s opinion of a restaurant.

The university researchers concluded that diners associate 99-cent price endings with VALUE, while a whole-dollar price is more likely to inspire thoughts of QUALITY.
So a $4.99 hamburger has the psychological effect of being a BARGAIN, while a $5 hamburger must be really good and of better QUALITY.

The researchers collected menus from 231 restaurants in the Columbus area to look for trends. They then gave 73 people one of three versions of identical menus—with different prices—to determine if the one-cent difference evoked feelings of “quality” or “value.”

They discovered that high-end, fine dining restaurants should stay away from using menu prices ending in 99, 98 or 97 cents, as it gives a conflicting image…. You could be insulting the consumer!

Fast food and casual dining restaurants on the other hand can use this psychologically “price lowering 99 cent” ploy as they are selling VALUE for money rather than projecting the image of QUALITY. They are focusing on keeping everything as cheap and value-oriented as possible.
How a retailer, offline business or online marketer, “prices” their products can tell a customer a lot about the “priorities” of the business. For example on my own website, I decided to price my latest info-pack at a “whole” $10 rather than the psychologically quality lowering $9-99 or $9-97.

As I always say, the proof of the pudding… The real test…. Is in the results obtained…. Guess what, without blowing my horn, or trying to self promote myself here on Dien’s good forum… It’s going “gangbusters”… I can hardly keep up with the daily manual entry of credit card orders in my Bank merchant account paperwork!

Why are so many marketers and retailers resorting to using the “99 cent” pricing strategy?

Well according to the research by Professor “H.G. Parsa”… It appears that it’s simply a case of
“monkey-see, monkey-do”…. It’s being going on for so long in the retail world that few people stop to think about the “QUALITY” versus “VALUE” issue, and the image they are portraying for their business!

Other pricing research has also found that consumers are IGNORING prices that end with “9” BECAUSE people ignore THE LAST DIGIT!

In their analysis, the researchers statistically accounted for factors such as brand loyalty, advertisements, and the impact of in-store displays so they could focus just on how consumers processed the price information. They found that the best explanation for the purchase decisions was that consumers processed prices from LEFT to RIGHT -- and stopped at the first digit that was different when comparing two prices. For example, if a consumer compared prices for two competing products…. one $1.59 and the other $1.64 …. They would notice the difference between the middle digits (the "5" and the "6") and not pay attention to the final digits of the prices!

As far as what I originally said about how the “99 cent pricing” has been used in “retail store security”…
> It all started years ago, when supermarkets realized that if they were to price a product at $5.00 or $10 even... Then it would be easier for the shop assistants.. The people on the check out cash registers to "pocket the money"!!!
You see if a product was priced at $9.99 instead of $10.00... It would FORCE the assistant to OPEN the cash register, place the $10 bill in the tray and GIVE the customer their ONE CENT change!!

This is still true… I learnt this back in 1979 when I served my “consumer marketing apprenticeship” in the retail world. This was taught to me by the marketing manager of a large food chain (Known as “Coles Myers” in Australia… One of our countries largest retailers).

So while Ted Nicholas might have been conducting experimental price marketing on the “99 – 97 “ cent issue…. The same pricing strategy was being used for different reasons in the retail world.

I could go on and on about pricing … It’s uses and emotional effects on consumers, but I think you get the picture.

Warmest Regards & $uccess

Ricky Higgs




More Than $9-97... But Selling Like Hot Cakes!