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

Daniel Levy () and Avichai Snir ()
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Avichai Snir: Bar-Ilan University

No 2019-06, Working Papers from Bar-Ilan University, Department of Economics

Abstract: 9-ending prices are a dominant feature of many retail settings, which according to the existing literature, is because consumers perceive them as being relatively low. Are 9-ending prices really lower than comparable non 9-ending prices? Surprisingly, the empirical evidence on this question is scarce. We use 8 years of weekly scanner price data with over 98 million price observations to document four findings. First, at the category level, 9-ending prices are usually higher, on average, than non 9-ending prices. Second, at the product level, in most cases, 9-ending prices are, on average, higher than prices with other endings. Third, sale prices are more likely to be non-9 ending than the corresponding regular prices. Fourth, among sale prices, 9-ending prices are often lower, on average, than comparable non 9-ending prices. The first three findings imply that although consumers may associate 9-ending prices with low prices, the data indicates otherwise. The fourth finding offers a possible explanation for this misperception. Retailers may be using 9-ending prices to draw consumers’ attention to particularly large price cuts during sales, which perhaps conditions the shoppers to associate 9-ending prices with low 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: M30 M31 L11 L16 L81 D12 D22 D40 D90 D91 E31 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2019-06
New Economics Papers: this item is included in nep-mac
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Related works:
Journal Article: If You Think 9-Ending Prices Are Low, Think Again (2021) Downloads
Working Paper: If You Think 9-Ending Prices Are Low, Think Again (2019) Downloads
Working Paper: If You Think 9-Ending Prices Are Low, Think Again (2019) Downloads
Working Paper: If You Think 9-Ending Prices Are Low, Think Again (2019) Downloads
Working Paper: If You Think 9-Ending Prices Are Low,Think Again (2019) Downloads
Working Paper: If You Think 9-Ending Prices Are Low, Think Again (2019) Downloads
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