Common Price Tag Gimmicks Retailers Use To Lure You In

JCPenney’s campaign to revitalize the brand, which includes celebrity commercial star Ellen DeGeneres and a redesigned logo, will continue this week with items priced at round numbers, like $20 instead of $19.99 this week. So what’s the big idea behind how retailers price items? Of course, every tag is aimed at convincing you to buy that item. Let’s check out some other common tricks.

First of all, that $19.99 instead of $20 makes customers less likely to question the value of an item, as it seems retailers have arrived at that precise number through careful calculation, says SmartMoney. That could work in JCPenney’s favor, as it will make the brand seem more luxurious than it actually is. For example, a $32 steaks sounds fancier than one for $31.99, right?

The original reason for round numbers, by the way, was to make sure sales associates would ring up purchases and make change for customers, instead of just pocketing bill for the precise amount.

Another tactic is to sell less calories for the same price — consumers don’t mind as much if they’re paying more for something if they think they’re saving on calories.

Buying more for the same price also works out well for retailers, who can bundle bunches of fruit and vegetables together to mark that as a special deal.

L.J. Shrum, president of the Society for Consumer Psychology, explains to SmartMoney: “Studies show that even though consumers can purchase five lemons for 20 cents each, having the multiple unit pricing increases sales,” he says. It’s called the “anchoring and adjustment bias,” he says.

So even if you don’t want five lemons, you might as well buy them all if it sounds like you’re getting a deal.

For more common tricks, check out SmartMoney.

5 Retail Price-Tag Tricks [SmartMoney]

Comments

Edit Your Comment

  1. dragonfire81 says:

    Something else I’ve noticed: There seem to be a series of relatively common price points, such as:

    $9.99
    $14.99
    $19.99
    $24.99
    $29.99
    $49.99
    $99.99

    and so forth. Compare with prices like:

    $11.99
    $22.99
    $27.99
    $38.99
    $56.99

    And so forth. I guess some numbers just seem more logical than others.

    • Lucky225 says:

      Yeah, I’ve noticed this too, I think it just seems to be how we view things, ten bucks, twenty, twenty five, thirty, fifty, hundred, etc. they round the nearest 5 or 10 bucks, but 1 penny less. And if you think about the actual markup, it’s perfectly ingenious because something that may profit at 12 dollars is now $14.99 — not $15 cus that would be too much in the consumer’s mind, but they already started profiting at $12, so now they got an additional 2 dollars and 99 cents in profit, nearly $3+ in profit then otherwise.

    • chizu says:

      When I worked retail — this is what I was told. It makes some people think that they are getting stuff for “under $10″, or $15, $20, etc. I think it’s because most people are looking for an item/gift at a certain price range. So it made sense to price them at those numbers rather than $11.99 (which is over their “$10″ budget) and etc.

    • AngryK9 says:

      That is another one of those tricks. It all comes back to psychology, how a person is more inclined to buy an item priced at $19.99 as opposed to exactly $20, and how they’re more likely to purchase items that are closer to common paper money denominations than something that might require a bit more effort to count out.

    • elangomatt says:

      Back when I was working in retail, I was always shocked at how many people fell for this trick. Husband and wife in electronics looking at DVD players (a number of years ago). One DVD player is much higher quality priced at $109.99. Cheaper DVD player with fewer features priced at $99.99. We probably sold 5 times more of the $100 DVD player than the $110 one. Most of the time when they asked for help, I managed to convince people to buy the $110 player, but not always.

  2. itsdotcom says:

    “For example, a $32 steaks sounds fancier than one for $31.99, right?”
    It does?

    • SomeWhiteGuy says:

      I’ve been to very few restaurants that have the prices as just whole numbers. I know I’ve passed a certain threshold here in the South when I notice that.

      • catastrophegirl chooses not to fly says:

        those are the places that use polenta in their shrimp ‘n grits instead of just grits

      • huadpe says:

        That’s kind of the point. When a restaurant prices in whole dollars only, they send a signal that they’re an expensive, high-class restaurant.

        E.g.

        Porterhouse (for two) 50.

        vs.

        50oz Porterhouse steak – $49.95

        Same steak, same price, but the first listing is much more akin to what you’ll see at a high-end restaurant, and the latter is more like what you’d see at a lower-end restaurant when advertising their top-end item.

        See this analysis of the menu at Balthazar (a fancy NYC bistro) for some good tidbits http://nymag.com/restaurants/features/62498/

      • aloria says:

        That’s the opposite of my experience.The last time I ate at a place that had anything other than a whole dollar amount, it was a McDonald’s.

        • kbsparky says:

          McD’s has the so-called “dollar” menu, with everything on it priced at an even buck …

      • KyBash says:

        The classiest places don’t put the price on the menu — if you have to think about what it’s costing, you’re too sleazy to eat there.

        • tooluser says:

          No, the most classiest places of all spell out the price in words. Sometimes even in French words. I’ve even been to a resturant that listed the prices in Braille. Now *that’s* classy!

    • imasqre says:

      It actually does make it seem “classier”.

      If you went into Nobu (it really doesnt matter if it’s JCPenney) and got a meal for 29.99, personally I’d be thinking “why is it on sale?” or something in that tone.

      A whole number means I can spend full price. Anything with a .99 on the end just feels like I’m being a cheapskate. Yes, even it is merely a penny difference mathematically.

  3. janeslogin says:

    At WalMart, a very successful retailer I’m told, I rarely see an item priced such as $19.99. They seem to always use $19.97 or some such. I think the 99cent fashion
    is obsolescent.

    • Zyzek says:

      It’s because they out-cheap the cheap.

    • Guppy06 says:

      Walmart also has Skynet to find the perfect price to balance increased sales and profit per sale. Slapping 99¬¢ on the end of a price is for merchants who don’t have the largest data center this side of the NSA.

    • flipflopju says:

      Some departments actually do it to categorize the item. In the jewelry department gold ended in a 97 and silver ended in a 94. It helped when doing returns and inventory since we had white gold and gold-plated silver, you can compare the price tag with the markings in the jewelry to compare and make sure you aren’t getting screwed over or miscounting. I’m fairly certain electronics did something similar with their suppliers.

    • Charmander says:

      In the store I work at, anything priced with a 7 on the end (for example, $2.37) is clearance.

      • Yomiko says:

        At JCPenney, .77 prices were clearance and .88 were “value buy” prices (little chance you could use a coupon on it). Or maybe I have that backwards, it’s been 8 years since I worked there. I wonder if they’re changing that pattern with the new procing scheme.

    • Phil Villakeepinitrreal says:

      No…most places still do x.99. Walmart does x.96 on everything except clearance/markdown and a few specific departments, and they do it because that allows them to avoid being sued over claiming to have lower prices. Because most places sell item A for $9.99, but Walmart sells it for $9.96. Ta-da…LOWER PRICE!

    • alana0j says:

      I noticed today at Sears they had some shorts labeled half off. They were originally $34, so sale price would be $17, yes? No. It said sale price was $16.99. It’s crazy how they use those gimicks to make items appear to be less expensive.

      That being said, I plan to buy a pair when I get off work. Because I would never pay more than $20 for a pair of shorts, so $16.99 sounds good to me :)

  4. Guppy06 says:

    “Another tactic is to sell less calories for the same price”

    Just to clarify, the original article is talking about the Grocery Shrink Ray, not daring to charge consumers for aspartame.

  5. YouDidWhatNow? says:

    “The original reason for round numbers, by the way, was to make sure sales associates would ring up purchases and make change for customers, instead of just pocketing bill for the precise amount.”

    I think you meant “non-round numbers.” So…like, square ones.

    • Applekid ‚îÄ‚îÄ‚î¨ Ôªø„Éé( „Çú-„Çú„Éé) says:

      Whole numbers versus real numbers rounded to the nearest hundredth.

      If I owned a bakery, I’d try my hardest to make a pie cost $3.14

      • YouDidWhatNow? says:

        Take it at least to 5 or 6 decimal places…anything less would be irrational.

        …come to think of it, anything more would also be irrational.

      • minjche says:

        Make it $6.28 and have two flavors mixed together. Then it’d be 2pi.

        I’ll take no less than a 70% royalty for the above idea.

      • cybrczch says:

        I’d make a square pie and sell it for $9.87 (pi squared)

  6. SpiffWilkie says:

    Fewer calories….FEWER!

    • PHRoG says:

      Careful…that vein looks like its about to pop!!!

    • edman007 says:

      Reminds me of the low sugar apple juice, advertized as half the sugar and calories, it’s actually just a 50/50 mix of apple juice and water, same price though.

      • minjche says:

        That’s Trop50 orange juice in a nutshell, but they charge more for it.

        • Zachary Jacob Zblewski says:

          Not really. They also add artificial no-calorie sweetener to the mix. If you mix juice and water 50/50 at home, it won’t taste the same.

  7. HSVhockey says:

    Maybe it is just cause it is the end of the day, but everything after the steak question couldn’t have made less sense to me.

    • ipsedixit says:

      agreed

    • icruise says:

      Yeah, I think a little more context would’ve been helpful to make sense of these observations. I’m like, “less calories? I thought were talking about JC Penny. And now we’re talking about lemons for some reason…?”

  8. ophmarketing says:

    “First of all, that $19.99 instead of $20 makes customers less likely to question the value of an item, as it seems retailers have arrived at that precise number through careful calculation, says SmartMoney.”

    Seriously? Are the people at SmartMoney from this planet? Because I can’t think of an actual human who would make that leap in logic from a $19.99 price tag.

    • Lucky225 says:

      You obviously haven’t been around humans long, they are not logical creatures. These are not the droids you’re looking for. Move along, move along.

    • Agent Hooter Enjoys Enhanced Patdowns says:

      I had always heard that the .99 was to keep the first number down, because your brain doesn’t really read the whole number or consider tax. So 5.99 looks like 5 dollars to your brain at a glance, and 19.99 just seems like “under 20″.

      Though I have noticed, restaurant-wise, that the ones with the more expensive dishes DO tend to just use whole numbers instead of a 7.99 sandwhich from a cheapy Eat n Park or Fridays.

    • Charmander says:

      Seriously.

      It’s not supposed to be obvious to you. It’s kind of a subtle tactic, working on your subconscious.

    • elangomatt says:

      Obviously you have never worked in retail. I had some customers argue with me when I said something cost “about $20″ when the price was actually $19.99. They kept insisting it was “about $19″. I can see your point though. If I hadn’t had that conversation myself, I probably wouldn’t believe it was possible either for someone to be fooled by the .99 part of the price.

  9. jjq says:

    But consumers are forced to waste time reading the fine print under those lemons, which might read, “lesser quantities, $0.25 each”. They think they are beating the system by only picking three, expecting to pay sixty cents, and never even looking at the price charged on the reciept. Oh, those stipultations arent always there, but I’m finding it more common.

    AS for Penney’s, it remains to be seen whether consumers will find a reason to actually go to penneys, if they’re not having a sale. First, people aren’t flocking to “malls” like they used to. Second, consumers are swayed by the word “Sale”. Thats why Kohls marks up a plain white shirt to $69, then discounts it several ways, so the consumer percieves a bargain, yet Kohl’s still makes their profit margin. Third, when Sears tried rolling back prices 10% storewide, and eliminating slaes, it didnt work, and sale prices returned. [Anyone else remember when Sears did that?]

  10. wickedpixel says:

    while we’re at it, can we stop selling gas at prices that end with 9/10 of a cent?

  11. sirwired says:

    Welcome to the early 1900’s Consumerist. This isn’t exactly breaking news.

  12. Olivia Neutron-Bomb says:

    “The original reason for round numbers, by the way, was to make sure sales associates would ring up purchases and make change for customers, instead of just pocketing bill for the precise amount.”

    Huh?

  13. There's room to move as a fry cook says:

    $3.51 gas is cheaper than $3.519 gas

    • dwasifar says:

      True, in a meaningless sort of way. If you have a 15 gallon tank, you will save 13.5 cents on your $52.78 fill-up.

      I don’t know about you, but I don’t think I could stand the excitement of walking around with an extra thirteen cents burning a hole in my pocket. :)

  14. shammer says:

    A little heads up for most big box stores, different price endings have different meanings;

    Ending in $.99 usually signifies a regular price, $0.98 means a price match from a different retailer, $0.97 means item is on clearance, $0.96 is often reserved for an open box or demo item being sold and $0.95 is when an item is “push to clear”

    • LMA says:

      Yes, many large retailers use “strange” ending numbers so as to distinguish sale and clearance prices in their computers. The place I work for uses “.99″ for limited time period sales items, “.93″ for first line clearance, and “.83″ for second and third markdown clearance items.

    • DrPizza says:

      Uhhhh, if .99 is normal for retailers, then what the heck are you “matching” to which results in .98?

      • bobert5696 says:

        It means that if they are trying to outprice the competitor, the price end in .98 to denote that.

  15. There's room to move as a fry cook says:

    Stupid 5 page article when 1 page would do.

    • brinks says:

      Incorrect. That clip art of chocolate pieces and a woman holding a shopping bag really clarified the whole article for me. I wouldn’t have understood a thing without them.

  16. ancientone567 says:

    The 110.99 trick does not work on me. I automatically think, ok 111- plus 6% tax = 117.66

    • sakanagai says:

      I do the same thing. XX.99 becomes XX+1. The only problem so far is that the habit extends elsewhere like when I post-dated all of my checks for a year some time back.

  17. jp7570-1 says:

    It’s the same thing with gas pricing – since our currency doesn’t have a 1/10 of a penny, the convention sort of becomes meaningless. When gas was $0.299/gallon it may have made a difference, but not when it will be pushing the $5/gallon mark in the next few months.

    I’d prefer straight-forward pricing as the default – no more $xx.99 or whatever. Just round it to the nearest dollar, or structure the price so that it is an even amount when sales tax is included.

    And while we’re at it, let’s finally replace the US dollar bill with a dollar coin. The US dollar bill is the lowest value paper currency in the world. Make the $5 bill the smallest denomination bill and put George Washington on a coin – they last longer than bills too. And yes, we’ve tried dollar coins in the past which have failed to be adopted. But if it is coupled with a phased elimination of the paper dollar bill, the coin should be adopted quickly. (And don’t give the argument that vending machine companies will oppose it. Just look how fast they adopted vending machines that take credit cards. They can move fast if they want to.)

    • Selunesmom says:

      It’s impractical for cash register tills. A stack of two hundred dollar bills weighs far less and takes up much less room than two hundred dollars in dollar coins.

      • DanC922 says:

        Australia has been using $1 coins for a long time and the cash registers work fine.

        • Dallas_shopper says:

          Ditto with England; the Bank of England stopped printing pound notes in 1984. Some banks in Scotland (which has its own paper money issued by various banks) still print pound notes, but they’re pretty damn rare.

  18. Straspey says:

    The fact of the matter is —

    $19.99 really *IS* less than $20.00 – and even though we all know it’s only a penny – nobody goes through the actual process of thinking – “Hmmm…the price is $19.99, which is actually really $20.00, and…”

    Our brains calculate “19 is less than 29″ — which is why the $XX.99 pricing has been, and continues to be, so successful.

    Also – as far as “Five for a dollar” is concerned – I almost never buy more than three lemons at a time, and – as with all fresh produce – the price fluctuates weekly. If they were “Three for a dollar” last week, but this week are marked “Five for a dollar” – do I buy five to save money on last week’s pricing ?

    That’s what the store wants you to do – “Oohh…look – they were three for a dollar last week and are five for a dollar this week. I better buy five today before the price goes back up next week.”

    But then two of the lemons go bad before you can use them and you have to throw them away. But it doesn’t matter, because the store still has your dollar – whether it was for three or five lemons — as opposed to buying three lemons for sixty cents this week and saving the forty cents.

    Occasionally at my supermarket it will say “Three for Five Dollars. Must buy three to receive the savings. Otherwise $1.79 each” If it’s a non-perishable item we use regularly, then sure, I’ll take advantage of the sale.

    • Kaleey says:

      Gas stations use that trick on candy.

      *places one candy bar on the counter*
      Cashier: “You know, those are 2 for 2.50 right now.”
      Me: “Yeah, but it’s 1 for 1.79.”
      Cashier: “It’s cheaper to buy 2!”
      Me: “No, it’s cheaper PER ITEM. I want one.”
      Cashier: (confused)

  19. dibarnu says:

    “The original reason for round numbers, by the way, was to make sure sales associates would ring up purchases and make change for customers, instead of just pocketing bill for the precise amount.”

    This is obviously not true. If this really were the case then the shop owner is a moron. All the cashier has to do is have some change handy that’s not in the register. And what’s to stop the cashier from ringing up 1.99 instead of 19.99 if they didn’t have change handy but were determined to steal from their employer?

    I don’t know what the real reason is but I suspect it’s psychological. It certainly isn’t this making change myth.

  20. gman863 says:

    I’m not exactly an underwear model (5’11”, 245#); however I see nothing wrong with making people pay based on the amount of real estate they take up.

    On a few flights, I’ve had a tubby nect to me attempt to keep the armrest up in an attempt to get more space (the answer is always “no” as I lower it for the duration of the flight). I paid for a full seat – not three quarters of one.

    TWICE I’ve been stuck next to a Fat Bastrad look-a-like who actually DID take up two seats. Naturally, due to their oversize load, they always take the aisle and middle seat. Although I usually enjoy a window seat, since it takes about five minutes for Porky to stand up, any trip to the lavatory on my part is impossible during the flight. There’s also a legitimate safety issue: If the plane had to be evacuated quickly, I’d literally have to jump over my seat into the next row for any chance of escape. I don’t want to end up on 1,000 Ways To Die as Way To Die #737: “Fat Chance”.

    • gman863 says:

      Ooops…posted under the wrong topic using cut and paste.

      It’s 2012 — can’t we get an edit button, people?

  21. gman863 says:

    And now for the corrected post…

    I’ve seen studies that show people fixate on the first digits in a price, especially when comparison shopping.

    As an example, the mind tends to register a price of $3.49.9 per gallon of gas as “three forty something” instead of $3.50. Although someone may state the price as “three-fifty per gallon”, many of the same people will go a few blocks out of their way is station “A” is at $3.49.9 and station “B” is at $3.50.9 (and, in the process, burn more than the fifteen cents they’ll save on an average fill-up).

    This is also an issue with price versus value. A 40,000 mile tire may sell for $99.99; a 60,000 mile tire at $109.99. Even though the extra 10 bucks equals 50% longer life, the fact it’s “over a hundred bucks” is a deal breaker for those who look at price alone.

  22. yagisencho says:

    Price biases also vary by culture. In Japan, prices typically end in the number ‘8’ (due to its association with prosperity).

    The more you know…

    • kiwihead says:

      Interesting that the Japanese pricing is to promote prosperity and the American prices are to get over on stupid consumers.

  23. shufflemoomin says:

    Why is it common in the UK for prices to end in .99 and in .95 for the US? Any logic behind that?

  24. km9v says:

    In other news, water is wet.

  25. ericlewis91 says:

    What about lululemon? All of their items are priced with an “8” like pants for $98 or sweaters for $108, they could easily put it as $100 or $110 but they don’t.

    (Lets not get started how its “over priced”, just a comment)

  26. MECmouse says:

    The cents’ portion of the price (.49, .69. etc) also allows managers to easily discount items when asked by a customer by a certain dollar amount or percentage without cutting into cost.