Contrarily, long-term orientation showed no significant association with precise prices. To our knowledge, the present work offers the most comprehensive analysis on the impact of cultural differences on the prevalence of price endings to date. The values shown represent the probability predicted by the individual cultural dimensions that a price will be set as a precise price.
Additionally, you as a seller tend to make more precise counteroffers, which in turn leads to higher final sale prices. A high precise price raises the feeling that you, as a seller, have thought well about your price, leaving less downwards wiggle room. High precise pricing (the last digit being 6) leads to the highest final sale price, getting your company the largest payoff!
Table 1 shows the scores on individualism, uncertainty avoidance, and long-term orientation as well as price prevalence (in %) for each country. We were able to read out prices from 31 different countries. (4) The values for the three cultural dimensions individualism, uncertainty avoidance, and long-term orientation were taken from the “Hofstede-Insights” website Hofstede-Insights (n.d.). In terms of selecting countries, a set of a-priori criteria was established to reduce complexity of the data analysis and to ensure comparability.
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Recent research suggests that consumers perceive just-below prices as possibly deceptive and manipulative (Jeong and Crompton, 2018). For instance, research showed that just-below prices signal lower quality and to be “the lowest price around” (Schindler and Kibarian, 2001). These differences in price-ending prevalence likely also affect consumers’ price perception (see Troll et al., 2023). For instance, contrary to our hypotheses, we find that an increase in individualism positively predicts the prevalence of round prices and negatively predicts the prevalence of just-below prices.
But why do retailers differ in their use of and preference for certain price endings? In sum, choosing particular post-closing trial balance price endings leads to the inference of much more information than just the exchange value of a product. For instance, round prices (e.g., $30.00) are sometimes used with the aim of indicating high(er) quality (e.g., Schindler and Kibarian, 2001) and trustworthiness (e.g., Dilller and Brielmaier, 1995; Suri et al., 2004). Based on the respective culture, Charlie and Kim might expect retailers to set specific, heterogenous, prices. Finally, (3) a higher long-term orientation predicts a higher prevalence of round prices and lower prevalence of just-below prices. The difference between a successful product or service and an influential marketing campaign on the one hand and a missed opportunity on the other may hinge on something as simple as the numbers you choose.
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By leveraging such tools, businesses can make data-driven decisions to optimize prices effectively. These tools leverage data analytics and algorithms to provide insights on pricing strategies, competitor analysis, and demand forecasting. For example, if a competitor lowers their prices, a business may consider adjusting their prices accordingly to maintain market share.
Precise pricing involves using a price that avoids round numbers and appears precise. Nonetheless, these insights into the culture-price relationship are important for retailers and anyone operating in a globalized market. The authors also found that long-term orientation was linked to a higher prevalence of round prices. Cultures aiming to decrease uncertainty, on the other hand, might prefer just-below prices. The researchers included 9,200 prices from 23 different countries in their study. While all these price endings are common, little is known about why sellers in certain markets prefer one over the others.
This happens because precise estimates set higher accuracy expectations, and if wrong, they can erode trust. However, if an estimate turns out to be incorrect, imprecise numbers (e.g., “about 400”) lead to higher trust and consumer loyalty compared to precise numbers (e.g., “409”), even if the imprecise estimate is less accurate. Therefore, higher numerical precision might help to enhance credibility and persuade consumers.
Dynamic pricing models are a powerful tool for businesses to 17 ways to set up your handyman business for success optimize their pricing strategies and maximize sales and profits. However, during peak tourist seasons or special events, the hotel may increase prices to capitalize on high demand. By offering personalized discounts or time-limited promotions, businesses can incentivize customers to make a purchase and increase sales. By tailoring prices to specific customer segments, businesses can enhance customer satisfaction and loyalty.
- This approach allows us to attain a more holistic picture of price prevalence.
- A cross-cultural comparison of the need for uniqueness in Malaysia and the United States.
- These could be based on demographics (age, gender, income), psychographics (lifestyle, values), or behavior (usage patterns, brand loyalty).
- The variation of the product range is an important feature, as research has shown that the product type significantly impacts the functioning of price endings (Choi et al., 2014).
- The results showed that for all price endings a model with multiple predictors was reasonable.
- Imagine a skincare brand targeting millennials with personalized anti-aging products.
Increased efficiency
For inelastic goods, raising prices might be more profitable. Even if prices soar, the supply remains relatively fixed. Even if prices rise, people still need these items. Price elasticity measures how sensitive the quantity demanded or supplied of a product is to changes in its price. Analysis suggests that consumers view such pricing as better value. Precise pricing has been consistently found to be more attractive to consumers.
rounding can reduce sales
Buyers tend to make the lowest offers when a price is rounded, yet rounded pricing is a commonly used strategy. The price was set to $200,000 (rounded), $199,000 (just below), $201,326 (high precise) or $198,674 (low precise). As a seller, you try to aim for every product to be sold at the highest final sale price.
- In addition, the results indicate that all three predictors explain separate parts of the variance of price prevalence.
- In line, retailers include individual pricing models and shipping prices that make it harder to compare online prices than prices in an offline context (Brynjolfsson and Smith, 2000).
- Automate your sales and marketing, drive operational efficiency, and improve the customer experience.
- A price range gives you breathing room.
- Sirch is a unique provider of automated pricing tools for mid-market and large retailers.
- One of the biggest risks of showing a precise price is creating unrealistic expectations.
- Continuously monitor changes, adapt, and refine your pricing strategy.
If a price is perceived as well-thought-out, it is reasonable to assume that retailers took more time to come up with this price instead of using a standard price. This is why prices ending on nine are seldomly used (Macé, 2012) in that context. Precise prices are prices that are neither just below a round figure nor are they round in terms of ending in trailing zeros; thus, they form a distinct category. In contrast, just-below prices (also known as “odd prices” or “nine-ending prices”, e.g., Holdershaw et al., 1997; Macé, 2012) are prices that are “just below” these round figures (e.g., $2.99, $849). Round prices (at times also referred to as “even prices”, Wieseke et al., 2016) are prices that have been rounded to the nearest whole number (integer; e.g., $3.00) or whole power of ten (e.g., $850).
Further, managers may prefer using simplified numerical information when the consumers are likely to be stressed since prominent numbers tend to facilitate quick decision-making. In other circumstances, consumers may be under time pressure or strain, and in these cases, they are more inclined to rely on easily available “prominent” numbers (i.e., 5, 10, 50, or 100). Such an approach is likely to increase consumers’ purchase intentions, even if the economic value is similar to a less fluently processed deal. For example, offering a “Buy One Get One Free” deal on items priced at $50 each adds to a total value of $100, which is a prominent and easily processed number. A similar effect occurs when the numerical elements in a price promotion form familiar patterns or multiples.
The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. Measuring the hedonic and utilitarian dimensions of consumer attitude. Does culture influence web site quality expectations? Hospitality managers’ price-ending beliefs. The 99 price ending as a signal of a low-price appeal.
Patients rely on them for health, regardless of price changes. If a product has close substitutes (e.g., different brands of smartphones), demand tends to be more elastic. For instance, if the price of avocados rises significantly, farmers can plant more avocado trees. Consumers are highly responsive to price changes. In other words, it quantifies the responsiveness of buyers and sellers to price fluctuations.