Canadian Finance Blog

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99 Cent Pricing Strategy Posted: 06 Apr 2011 02:00 AM PDT One of the strongest memories I have as a child regarding money was when our family held garage sales. I would get to collect different old toys that were “mine”, price them for sale, and reap the rewards of any sales. It was always fun to get  a small wad of cash, which I would often spend purchasing something else from a different garage sale that would sit untouched for a year or two. I have a memory of being taught how to best price things, however, and one day I remember learning about “99 cent pricing”. Basically someone told me that a lot of goods are priced at 99 cents, because it seems like it is so much less than the next full dollar. Would you not rather pay 99 cents for an item, rather than a full dollar? Or pay 9.99 as opposed to 10 dollars? I remember being shocked by this, realizing that there was some scary man out there who figured how best to manipulate my mind as I approached a product. As the years progressed, I always thought that I was ahead of the game. As I was in a store, I would see an item priced for $23.99 and always mentally round it up to $24, plus tax. I felt like I was beating the system, making informed decisions, and not being fooled or manipulated. I would always correct others if they said an item only cost 5 dollars if it was priced at 5.99, or even 5.50. Over time, I noticed that less and less people seemed “fooled” by the 99 cent pricing, and started to wonder when companies would realize that we knew it was only a cent less. Lately, however, I have noticed that more and more prices have been rounded off. Subway’s $5 footlong (not $4.99 footlong), and McDonalds Dollar Value Menu (not 99 cent menu). WalMart will also often price their merchandise at a flat dollar rate. Real Canadian Superstore sells their clothing at even dollar values. So have the giant corporations finally realized we cannot be fooled? Well, one look at the electronics at those same stores will have you wondering if they ever sit down as a group and discuss an overall strategy. Most higher priced objects still sell at a cent below the dollar, and will often add a few more 9s into the mix as well (999.99). To further complicate the issue, consider how little we really care for a penny. When I was a child, I would be excited if I found a penny on the ground, but even as soon as I reached an age where I recognized the actual value of money, I stopped caring if I found a penny. It has gotten to the point where if I see anything less than a loonie on the ground, I probably won’t even pick it up because it is not worth the effort or the potential chance of getting something gross on my hands. So why would I mentally value a penny less than the actual cost? Pennies are so worthless, the United States has even begun to seriously consider eliminating them from their monetary system, as at the moment, it costs the US government more money to produce the coin than it is valued at. Are you fooled by 99 cent pricing? What other tricks do retailers use against you? What steps do you take to get one step ahead of the corporate mind games? Related Posts: Just Say No To Extended Warranties 10 Ways To Save Money On Groceries 10 Ways To Save Money On Christmas Shopping 99 Cent Pricing Strategy originally appeared on Canadian Finance Blog on April 6, 2011.

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