You’re a smart person.
You don’t get duped very often.
You know a scam when you see when.
You’re even smart enough to know that $9.95 is really $10.00
See, I told you that you’re smart. Now, given the condescending nature of my tone here, do you think any of your customers wont be smart enough to know this? Now that you have answered this question please ask yourself why you would ever engage in such trick pricing for your customers.
At last, we’re entering the age of ‘authentic capitalism’, and $0.99 cents isn’t fooling anyone. In fact, you’re quite possibly embarrassing yourself on a commercial level and damaging your brand or start up. The threshold price point is the biggest hoax in consumer marketing.
My suggestion, is to have honest pricing. Charge to the dollar. Make it simple and gain respect simultaneously. Your customers wont mind, really.
Who wants a pocket full of change anyway?
Here is the usual order of events:
A commodity moves up astronomically in price, consumer trends change, competiton stiffens, a gap to profit target appears.
Easy solution: just raise the list prices to reflect the gap. Don’t worry about whether your brand equity can stretch that far. Don’t worry about what your competitors are doing when you have brands that are very price sensitive and little brand loyalty.
Senior Management confidently sign off the list price rise, minds already planning where how to spend the bonus.
Then…pain from all sides when consumers refuse to come on the journey.
Then…panic. I’ve already told the wife she can book in for the breast job, the face lift and the new butt.
Trade spend goes into over-drive getting the shelf prices back to where they were before. Then angry scenes when the trade spend is over-spent and Sales come after Marketers like angry wolves to claw back some A&C.
Fingers pointed…”Marketing aren’t accountable enough”…”Sales don’t know how to manage their budget”…”Finance aren’t making these numbers look good enough”….”Why aren’t R&D providing more innovation?”…”There are too overheads in this business”, etc etc ad nauseum.
Anyone who has ever worked in FMCG has seen this before. It’s deja vu everywhere I go.
Agree with what you have said…. but the focus on this entry is the retail pricing policies of companies dealing directly with consumers not charging flat dollar prices.
Is this the comment police?
No policing on this blog. Just dialogue.
My understanding is that the initial driver for the 99 cent suffix on prices was to force sales cashiers to use the till (i.e. the transaction must be rung up so as to provide change). This was meant to reduce some of the risk of pilferage. Over time I expect it also become a “tool” of the evil marketing department.