Theinclusive nature and economic sense of odd pricing
Oddpricing is among the most effective methods of psychological pricing,especially when used in the retail industry. Studies have shown thatthe use of odd pricing increases the number of orders made bycustomers by between 9 % and 34 % (Harris, 2015). Odd pricing worksby taking advantages of the weaknesses of the human brain andpsychology. For example, people tend to naturally look at figuresstarting from the left to the right side, which leads to a left-digiteffect (Lewis, 2013). In addition, the memory process plays some rolein enhancing the effectiveness of odd pricing. For example, roundingfigure 9 leads to 10, but the minute change creates a perception thata figure 10 is significantly bigger than 9 (Larson, 2014). Users ofthe odd pricing strategy increase sales by playing with thepsychology of their potential customers.
Althoughsome of the pricing strategies (such as price discrimination, oddpricing, two-part tariffs, and cost-plus pricing) can be consideredto be economically ethical, in spite of the fact that they playaround with the psychology of customers. These pricing strategieschallenge customers to make rational decisions when making purchases(Chovancova, 2011). For example, odd pricing creates a perception ofa lower price than the actual price, but all characters in a givenprice are displayed for the customers to view and make decisions.This suggests that the pricing strategies are ethical since businesspeople play their role of exploiting all available opportunities toachieve their goals (such as maximizing sales) while customers failto play their role of making rational decisions. Therefore, oddpricing is a conclusive and an economically ethical strategy.
Chovancova,M. (2011). The influence of price endings on consumer behavior: Anapplication of the psychology of perception. ACTA,59, 29-38.
Harris,B. (2015). Why odd pricing works: The $ 9.99 psychological illusion.HubPages,Inc.retrieved July 25, 2015, fromhttp://harrison8bal.hubpages.com/hub/Why-Odd-Pricing-Works-The-999-Psychological-Illusion
Larson,B. (2014). Psychological pricing principles for organizations withmarketing power. Journalof Applied Business and Economics,16 (1), 11-26.
Lewis,S. (2013). Odd pricing at retail gasoline station: Focal pointpricing and tacit collusion. Journalof Economics and Management Strategy,1, 2-33.