"High-End" and "Value" Pricing Strategies on Consumer Goods

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One of my very smart Harvard friends once told me that the best way to describe me in one sentence is that I take pleasure in appreciating little things in life that other people miss seeing. I think that this is probably very accurate about me.
Recently, while shopping with my mom in Ann Taylor for some clothes, I noticed that almost all of the regular clothes were priced as an “8” number ($18.00, $28.00, etc). On the other hand, all of the sales items were priced as “99 cent” numbers ($29.99, $19.99, etc). 
This reminded me of something that I learned in a Principles of Marketing class in college about the psychological strategies that are used for determining how to price items. 
The professor, who was very big in to behavioral finance/economics, stated that we as humans tend to view even prices as a “quality” (high-end) item, and odd prices as a “value-priced” (sales) item.
After seeing this in play at Ann Taylor, I was curious to discover whether or not a lot of other retailers are using this strategy as well. 
To investigate this, let’s do a little online price comparison, using the forum of clothing as the common thread (no pun intended) to see if this technique is used commonly. We’ll compare regularly priced items with “sale” items for each company investigated.
Shown below are the results of my findings.
  • Walmart.com – Polo Shirts  
    • All priced at whole numbers, ranging from $7 – $12, both even and odd Dollar values.
    • What a deal, right!?
  • Walmart.com – Rollbacks of the Day
    • All priced at whole numbers, ranging from $5 – $25, both even and odd Dollar values.


As you can see, the majority of the “sales” items are oddly numbered down to the cent and the regular items are evenly numbered down to the cent.
This is quite an interesting find! However, it is not very surprising! In the American society, it seems that a 99-cent price is synonymous with a sale! This leaves me with one question. 
Just why is it that an oddly priced item implies a sale?

In doing a quick search on the internet, I found the article at the following link from Wikipedia about the psychology that goes on around pricing strategies.

The article gives two very meritorious explanations for why 99 cent pricing is perceived by buyers (including me) as a sale.

  • “Fractional prices suggest to consumers that goods are marked at the lowest possible price.”
    • To me, this explanation means that when a retailer places a price at a 99 cent increment, we as consumers feel that it was almost painful for the seller to place the price under the Dollar mark.
    • Very cleaver little plan!
  • “Judgments of numerical differences are anchored on left-most digits, a behavioral phenomenon referred to as the left-digit anchoring effect. This hypothesis suggests that people perceive the difference between 1.99 and 3.00 to be closer to 2.01 than to 1.00 because their judgments are anchored on the left-most digit.”
    • I think this explanation makes a lot of sense. I believe that we as consumers are conditioned to see, process, and decide on things very quickly.
    • As a result, we often just see the “1” and the “3” in front of the two prices, are aware of the incremental cents involved, but just subconsciously place less importance on the 99 cent figure.
How about you all? Have you all seen any good examples of this “odd/even numbered” pricing strategy at work in any stores you frequent? 

What do you think is the main reason why people pay less attention to the amount of Cents on the price?
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