Odd- end pricing is another pricing strategy that is used by many retailers. Odd-end pricing is the “ubiquitous practice of expressing a price so that it falls just below a round number” (Harris and Bray). In other words it is the technique of pricing items with an ending of nine versus using a solid, round number. Consumers are “alleged susceptibility to “price illusion” (Huston and Kamdar, 1996). This price illusion is what many experts consider the illusion that business give to the consumer that because a price ends with .99 on the price tag it is pricing is consider to be less. The history of odd-ending pricing became present with the invention of the cash register, many business owners would use this as a way to prevent employees from pocketing the money that was given to them. By pricing items with an odd ending number, employees would be forced to open their cash registers to hand back change. Nowadays, odd-end pricing is used as a marketing strategy. Many experts believe that pricing items at $29.99 versus a solid price of $30 is better for business. Retailers believe that by pricing an item with .99 as the ending value, the consumer believes that the item is less. Consumers believe that pricing an item one cent less than the solid number gives them a deal. Many consumers always look for a “deal” therefore retailers utilize odd-end pricing as a way to manipulate consumers into believing that they are getting a deal. Local business owner Mark Churchwell uses a strategy of pricing items at .80, he says that using a basic pricing system of 24.95 is just another number but if you price it at 24.80 it looks like you used some impressive calculation which make the so consumer believe this must be a good price. Research sugge...
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...icing can beneficial in creating bargain shoppers. A local business owner, Mr. Churchwell stated “I feel that it is ethical to make profit as long as you tell the truth. We are in an economy that is very difficult to survive. I feel that it is ethical to make your prices appear to be a bargain for customer as long as truth is the basis.” According to many studies, these pricing methods can be beneficial to retailers by influencing more consumers to buy more. However, pricing can also be detrimental to retailers in that it can cause consumers to abandon their brand to search for more of a bargain. There are many different pricing methods such as price points, prestige pricing, and odd-end pricing that have been proven effective for consumers and retailers. All in all, pricing methods can be beneficial to consumers and retailers, but are more beneficial for retailers.
The company’s pricing strategy is concentrated on anticipating and quickly responding to the changes on customers’ preferences to enhance a better product-line. By doing this so, American Eagle is always doing research about the changes in the economy and customers preferences, dictated by fashion and season. Its goal in this context is to get the correct merchandise due to it must be ordered well in advance of the selling season (p.9). The price of its clothes and accessories varies depending on the item and/or the clothing line that ranges from affordable to a bit expensive. This company also provides coupons. discount codes, and deals that lets the company to attract more customers. For instance, at the end of seasons, when American Eagle
One important thing when looking at our price structure was determining the structure or our product. We decided to go 15% Cheeto and 85% bagel. Our reasoning was that this item is a bagel being accented with Hot Cheetos. The Hot Cheetos are meant to add a unique flavor; if we add too much Hot Cheeto flavor it might overpower the bagel. This would be bad because it would alienate the main design of the product thus not applying correctly to our customer group.
If it was $9.09 it would be rounded up to 9.10. The rounding system seem to work well for the military. It would work well for us and most stores already roundup the price. I know you think you pay more when they round up but then you won’t have to carry around coins and take forever looking for them and counting them out. Coming from “Is the penny worth it? By Rachel Mancuso source #2”Leading to my third reason.
However, business owners should be thinking about their consumers. If a business owner wanted more customers, they would round the prices down to the nearest nickel, not up. Money would be saved for consumers from the rounded prices, not lost. Say the prices were rounded against consumers, so that $29.96 would be rounded up to $30.00 after eliminating the penny. The customer would generally lose 2.5 cents with each newly bought item. The article from the National Review did the math, and found that “If someone engages in two such transactions per day, over a year they would lose $18.25 compared with the person given their pennies.” This amount is much less than the average amount lost from time counting pennies, which is $50. In any way, eliminating the penny would result in saving money, not losing it from rounded
... across the country. An item costing $9.99 sounds a lot better than $10.00. Putting the price into double digits may influence the customer of declining the item that he/she wants. With the rising costs of the nickel, this could lead to rounding up prices to the nearest dime. There's so many results that could happen in our country's future. This change could lead to disastrous
If the penny were to be taken away from the currency, a rounding system will occur for every payment. This rounding system allows prices to be rounded up or down to its nearest cent value. An example is when the original cost used to be $2.02, the new price will be $2 or the original cost is $2,03, new cost will be $2.05. One economist named Mr. Velde, has said, “But in a competitive market, you might as well see price market decrease.” This means that stores will try to gain customer by reducing their cost and using this rounding system to their advantage. He also said, “ Overall and over time, there should be no net price effect,” meaning that the rounding system will not be harmful to the prices on the internet. People are scared of the result when pennies is going to be deleted because of the consequences but those consequences may be temporary and not even be effective because of the rounding system and market price. The main point of the penny is to hold its one cent value but its cost is way more than its
That is an idiotic argument because people would not want to buy something that is more expensive when you can go across the street and buy it for a cheaper price. Jeff Sommer, writer of “Penny Wise, or 2.4 Cents Foolish?” conversed about this issue in his text. He argued “... 99-cent price of pizza might go down to 95 cents rather than $1 to avoid crossing that higher price threshold.” (Sommer 2). If you are in place like New York, there are food places and shops all around, this means that they will all be competing for more service. If someone wants to go buy food at a pizza place, they are going to go to the cheaper alternative because they won’t be spending as much money compared to the more expensive option. The penny should be removed because it will create competition between different companies, and the better companies will be remain in its location. Sommer also states in his article about pennies “A $2.01 cup of coffee should be rounded down to $2…” (Sommer 2). A cent lower on something may not seem like a lot, but eventually it will start to add up on items that will hold a larger value. The retailer will lower the price because they want people to go to their shop for the lower prices on items. This will feed into America’s capitalist society because the best stores will last, while the
The law of demand tells us that "Quantity demanded rises as price falls, other things constant, or alternatively, quantity demanded falls as price rises, other things constant (McGraw 2004). The XBOX 360 phenomenon that took place in 2005 is a good example of this economic principle at work. Microsoft's XBOX 360 gaming console was released into the U.S. market on November 22nd 2005. The release came after a great deal of advertising and media hype that ensured that the demand for the product would outweigh the supply. Quite simply, there were more consumers wanting to purchase the product than there was product available. The retail price for the gaming system with a hard drive was $399. Many consumers, however, paid a great deal more than the $399 sticker price to acquire the system. On the morning of the U.S. release, retailers across the nation sold out of the product within just a few hours of opening their doors to consumers. In the weeks that followed however, many consumers purchased the unit from sellers on on-line auction sites and even from individuals in parking lots for as much as $1500. The reason for this was that the supply was significantly less than the demand for the product. In some cases, parents who wanted to ensure that their children received and XBOX 360 for Christmas in 2005 were willing to pay well over retail for the hard-to-acquire system. In other cases, video gaming enthusiasts wanted to be among the first individuals to own and play the system. News reports across the nation showed footage of people lining up days ahead of November 22nd in order to secure a place in line at retailers that would have the product available on the release date.
 Retailers have been using price guarantees as a tactic to attract customers and stop customers from seeking lower prices. But we know you know better. “Lowest Price Guarantees” ,“Best Prices Guarantees”, we hear and see these enough times on advertising to take it with a great pinch of salt. It always comes with an Asterisks * You will almost always see an asterisk next to these statements because there’s always a catch. Buried in the often lengthy Terms and Conditions document, written in tiny fonts, are the conditions where the retailers are obligated to act on their guarantees.
Pricing is an important aspect of every business. Chief Financial Officer’s (CFO) use pricing to create financial projections, establish a break-even point, and calculate profit and loss margins (Power Point, 2005). It is the only element in the marketing mix that produces revenue. Price is also one of the most flexible elements of the marketing mix as it can be changed very quickly. This is usually done to beat competitor prices in an attempt to fix the product’s market value position very low (Anderson & Bailey, 1998). After all, high prices make it difficult to become the market share leader. The leading US retailer, Wal-Mart, is an expert at low product pricing as evident in 2004 with $250 billion dollars in sales to their 138 million weekly shoppers. However, they are also responsible for reducing prices so low that it drives specialty stores out of business. This is the effect Wal-mart has had on many toy stores and has almost closed the doors of the famous toy store Toys “R” Us Inc.
Absolute lowest price for an item can be most important for many consumers but not all consumer as it depends on factors such as income distribution and product type.
Have you ever overpaid for something? I think we all have. Your money—practically wasted. Luckily, I can teach you how to put an end to the anguish and regret you feel when you find your wallet and your shopping bag practically empty. By taking advantage of promotions, shopping second-hand, and comparing prices, you can prevent yourself from making the mistake of blindly overpaying.
Commercial firms use Price Elasticity to manage pricing and production decisions, especially in industries where the growth in sales and revenues are the primary measure of a firm’s success. Knowledge of the Price Elasticity for a product or service enables managers to determine the pricing strategy required to get the sales results desired. For example, a firm with a product with a relatively high elasticity would know that a large sales increase can be created with a small price decrease. Conversely, a firm with an inelastic product knows that changes in pricing would have minimal effect on sales.
For example, when McDonald’s was exploring to add Fish-O-Fillet to the menu, the creator of this menu item wanted to use halibut for fish but to use halibut would mean that Fish-O-Fillet could not be sold for less than 25 cents (Clark, 2007). McDonald’s ended up substituting the fish with cheaper type of fish than halibut and over time, to fit the cost of fish under the price point, McDonald’s would change the type of fish to be the most cost effective.
To breakeven, we would have to sell 267,857 units. We plan on selling the Galaxy Note 8 at a price of $499 which is cheaper than our previous phones in the Galaxy Note line. Consumers aren’t going to purchase a new smartphone if the price is going to be in the same range of the Galaxy Note 7. So we are going to be selling the smartphone at a discount. We are using odd-even pricing for the Samsung Galaxy Note 8. It gives a sense to the consumer that they will be purchasing the Samsung Galaxy Note 8 at a bargain, instead of using the even pricing method. The cost to make the smartphone itself is around $275. There will be a picture below that will explain the details of the build of the smart phone. For the breakeven I subtracted the Total Cost from the Total Revenue. The profit for year 1 will be $1 billion dollars, I subtracted the total revenue for year 1, which was $1.06 billion and subtracted that number by the fixed cost amount of $60