Saturday, May 9, 2009

No price will end in 9 unless it matters!

In my store, no price will ever end in '9' unless it is statistically significant. Nothing will be $0.99, or $0.49/lb. But if you can buy 100,000 of something in bulk, and the nine makes a big difference, it might sometimes end in 9, but it would be just as likely to end in any other number in such a scenario, not just 9.

Actually you wouldn't usually buy 100,000 of something. You'd probably buy a multiple of 12. Dozens are used in packaging.

Anyway, the numbers will be round numbers like $0.50, for courtesy to the customers.

Ending a number in 9 is supposed to fool you into thinking it costs less than it actually does. If it's $0.49, you remember the number $0.40. You're thinking it's somewhere in the forty cents range. Supposedly, fooling people into thinking stuff costs less must be extremely profitable for stores, because EVERYBODY does it. But I don't believe it's profitable. And customers will love it if you put up a big sign bragging about how you promise NEVER to end things with 9 unless that really is the natural result of your price calculations, and it's just as likely to end in some other number. Ending in a non-round number would only happen to items you buy in bulk, where small changes make a big difference in price.

People will then be able to do mental math and to estimate how much they are buying before they reach the checkout.

Also, if it were a regular store open to the public, and if I were obeying all the laws, then I'd be collecting sales tax. So I would pre-calculate the sales tax so that the result of price + tax = round number. This is not hard to do if you use algebra and set up a spreadsheet to do them all for you.

Customers would appreciate this courtesy so much. It is very annoying to customers that stores put a 9 on the end of all the prices and they can't do mental math easily.

If I had a choice between two stores, one of which charged $0.50 for something (while bragging openly 'We Promise Not To End In 9!', and the other charged $0.49, I would NOT go down the street to the store charging one penny less because it was a better deal! Wow, I'm saving a penny, but it's a huge annoying inconvenience to all my calculations, and the store thinks that they're 'fooling' me by charging one penny less, or they think they're underpricing their competitor.

It would matter if it was $999,000 versus $1,000,000. But other than that, it doesn't matter. It's just a stupid business practice and I wish people would wake up and stop doing it.

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