Price Gaming is a Tricky Business

Have you ever wondered why do prices end with .99 or why it is that business are always making some kind of deal? Are these deals as beneficial as the customer thinks they are? What about the items priced higher than usually. Most people tend to think the higher the price the better quality right? Well, these are some of the topics this paper is going to help you better understand. Price points, Prestige Pricing, and Odd-evening pricing are all common price games used in the business world today. Price points are the different prices stores use to manipulate the consumers into buying what they want them to buy. I am sure everyone has wondered exactly what goes into the pricing of the items they purchase or what is it about these deals that keep luring me into the stores. Price gaming is a tricky business and businesses love how well it can manipulate the customer into believe and thinking a certain way. Showing you these three common price games will help you better understand and help you evaluate your purchasing decisions a little better. Picture this. You enter a furniture store looking to purchase a bed. There is an option to purchase a bed for $300 and the chest of drawers for $100. The other option is to get the "bundle deal" that includes the bed and the chest of drawers for $350. The manager that creates the prices is hoping that the buyer goes for the "bundle option" because in the mind of the buyer he or she is shopping smarter and saving $50 through that deal. However, the manager has only created two ineffective price options to manipulate the buyer into buying the bundle deal. Is it fair to try to manipulate consumers into purchasing certain items? Many critics argue against the psychological pressures of price poin... ... middle of paper ... ... the consumer purchase an item because he or she believes that money is being saved. In one study it was found that pricing can tremendously help retailers in increasing their sales through pricing. In the study "when the price of margarine dropped from 89 cents to 71 cents at a local grocery chain, sales improved by 65%. But when the price fell two cents more to 69 cents, sales jumped by an astounding 222%! " (Lindstrom, 2012) Price points may be more helpful to retailers but they can also be detrimental. For example, consumers may become thrifty shoppers or bargain shoppers due to pricing; hence, some consumers may abandon the retailer's brand and look for "the best price rather than the best value." (Kay, 2013) For the most part, retailers benefit more from pricing methods versus consumers. However, there are benefits for consumers as well through pricing methods.