If You Think 9-Ending Prices Are Low, Think Again

Avichai Snir and Daniel Levy ()

EconStor Open Access Articles and Book Chapters, 2021, vol. 6, issue 1 (Forthcoming)

Abstract: 9-ending prices, which comprise between 40%–95% of retail prices, are popular because shoppers perceive them as being low. We study whether this belief is justified using scanner price-data with over 98-million observations from a large US grocery-chain. We find that 9-ending prices are higher than non 9-ending prices, by as much as 18%. Two factors explain why shoppers believe, mistakenly, that 9-ending prices are low. First, we find that among sale-prices, 9-ending prices are indeed lower than non 9-ending prices, giving 9-ending prices an aura of being low. Second, at first, 9-ending prices were indeed lower than other prices. Shoppers, therefore, learned to associate 9-endings with low prices. Over time, however, 9-ending prices rose substantially, which shoppers failed to notice, because the continuous use of 9-ending prices for promoting deep price cuts draws shoppers’ attention to them, and helps to maintain-and-preserve the image of 9-ending prices as bargain prices.

Keywords: Behavioral Pricing; Psychological Prices; Price Perception; Image Effect; 9-Ending Prices; Price Points; Regular Prices; Sale Prices (search for similar items in EconPapers)
JEL-codes: D12 D22 D40 D90 D91 E31 L11 L16 L81 M30 M31 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: If You Think 9-Ending Prices Are Low, Think Again (2021)
Working Paper: If You Think 9-Ending Prices Are Low, Think Again (2019)
Working Paper: If You Think 9-Ending Prices Are Low, Think Again (2019)
Working Paper: If You Think 9-Ending Prices Are Low, Think Again (2019)
Working Paper: If You Think 9-Ending Prices Are Low, Think Again (2019)
Working Paper: If You Think 9-Ending Prices Are Low,Think Again (2019)
Working Paper: If You Think 9-Ending Prices Are Low, Think Again (2019)
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