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Consumers buy into .99 pricing, says study

Date Published : Wednesday, July 23, 2008

Stores and restaurants have sworn by it for years but new research indicates that Australian consumers are indeed more likely to buy a product if its price ends in a nine rather than a "rounded up" zero, according to reports.

The findings come from a study carried out using a restaurant menu for a small, 22-seat eatery in western France, News.com.au states.

For the experiment, scientists gave customers a choice of five pizza dishes, four meat dishes, four salads and three fish dishes. Over the course of six weeks, the researchers changed the prices to offer different combinations of .99 and .00 endings.

They concentrated on the purchases of one of the pizzas to gauge customers' reactions to the changes, it adds.

During the first fortnight, the entire menu was given prices ending in zeros. Then the "target" pizza was reduced by one to end in .99, while the rest of the menu stayed the same.

Finally, all prices were given .99-ending prices for a two-week period.

The researchers found that when the pizza was priced at the same level as the other dishes, it was picked for 34.1 per cent and 35.9 per cent of pizza orders respectively.

However, when it was the only item with a .99-ending price tag it accounted for 49.5 per cent of all pizza orders - an increase of around 15 per cent.

According to previous research, .99-ending prices rely on consumers making psychological rather than rational decisions. Business professor Dr Manoj Thomas told the Post Gazette that .99 prices are most effective when they make a difference between the start of a price - for example $19.99 as opposed to $20 - because we read from left to right and place the most emphasis on the numbers we read first.

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