What is the rationale to price something as $9.99 instead of $10?
joe1...@yahoo.com
is mandatory except for food in many states, so a merchandize priced
as $9.99 will almost always end up costing more than $10, then why in
U.S. such pricing game is still being played?
Particularly funny is the gas price, which is fluctuating hourly
anyway, but is still priced as, say, $3.179 instead of $3.18 outright.
The 1/10th of cent is always marked in most gas stations.
If tax is to be paid anyway, why isn't it included in the advertised
price, straightforwardly? If government mandated taxes have to be
collected in telephone bill, why are they not included in the total
cost in the advertisement in the beginning, to avoid confusions to the
consumers that a $20 all-inclusive phone package is actually ended up
$40 shown in the bill a month later.
In Europe, every merchandise's price already includes taxes. Final
expense in a restaurant bill always includes the tax and tip already.
No any extra, hidden cost. It is so relaxing.
The difficulty here sometime for the vendor is, as the in the
following advertised example: "Brake Service: only $299.00-Originally
$409.00". They will never state like this "Brake Service: only $309.00-
Originally $399.00"? See the huge difference!
An economy that every imaginable business practice of misleading
consumers to make money has been invented and implemented, including
Corporate America's pension scheme and national Social Security
pyramid scheme.
Seerialmom
One word answer: Psychology.
Michael Black
> What is the rationale to price something as $9.99 instead of $10? Tax
> is mandatory except for food in many states, so a merchandize priced
> as $9.99 will almost always end up costing more than $10, then why in
> U.S. such pricing game is still being played?
>
others, you have confused this with a general consumer newsgroup, which
it's not. This sort of rant belongs in misc.consumers
But being frugal is about paying attention. Hence for real practitioners
of the frugal way, we do round it up to the nearest dollar, and the
thing means nothing.
But not everyone is frugal, so likely it does work for many people.
Michael
Jeff
news:1183651519.1...@g4g2000hsf.googlegroups.com:
> What is the rationale to price something as $9.99 instead of $10? Tax
> is mandatory except for food in many states, so a merchandize priced
> as $9.99 will almost always end up costing more than $10, then why in
> U.S. such pricing game is still being played?
>
> Particularly funny is the gas price, which is fluctuating hourly
> anyway, but is still priced as, say, $3.179 instead of $3.18 outright.
> The 1/10th of cent is always marked in most gas stations.
>
In Indiana, sales tax is included in the pump price for gasoline. They
still price it with the added 9/10 cent.
Ward Abbott
>Particularly funny is the gas price, which is fluctuating hourly
>anyway, but is still priced as, say, $3.179 instead of $3.18 outright.
>The 1/10th of cent is always marked in most gas stations.
If it is so easy to price gas at 3.179.............why in the world
hasn't a station priced their gas at 3.174? Could be done...and the
price is lower.
Rod Speed
> What is the rationale to price something as $9.99 instead of $10?
It looks cheaper to the stupids.
> Tax is mandatory except for food in many states, so a merchandize
> priced as $9.99 will almost always end up costing more than $10,
> then why in U.S. such pricing game is still being played?
Because most buy on the sticker price not what they actually pay.
> Particularly funny is the gas price, which is fluctuating hourly
> anyway, but is still priced as, say, $3.179 instead of $3.18 outright.
> The 1/10th of cent is always marked in most gas stations.
Same reason, it looks cheaper.
> If tax is to be paid anyway, why isn't it included
> in the advertised price, straightforwardly?
For the same reason the final cost isnt what
is advertised, it looks cheaper if you dont.
> If government mandated taxes have to be collected in telephone bill,
> why are they not included in the total cost in the advertisement in the
> beginning, to avoid confusions to the consumers that a $20 all-inclusive
> phone package is actually ended up $40 shown in the bill a month later.
Because it looks cheaper the way they advertise it.
Some countrys dont allow it to be advertised like that, it has to
be advertised with the taxes included in the advertised price.
> In Europe, every merchandise's price already includes taxes.
Its not quite that absolute, but yes, the advertised price usually includes the taxes.
You still see that x.99 approach tho.
> Final expense in a restaurant bill always includes the tax and tip already.
Wrong, not always, particularly with the tip.
> No any extra, hidden cost. It is so relaxing.
You still see that x.99 approach tho.
> The difficulty here sometime for the vendor is, as the in the following
> advertised example: "Brake Service: only $299.00-Originally $409.00".
> They will never state like this "Brake Service: only $309.00- Originally
> $399.00"? See the huge difference!
Its a pretty trivial difference in fact.
> An economy that every imaginable business practice of misleading
> consumers to make money has been invented and implemented,
Have fun explaining how come the x.99 approach is so common world wide.
> including Corporate America's pension scheme
> and national Social Security pyramid scheme.
Do the decent thing and set fire to yourself in 'protest' or sumfin.
Jeff
Or why not: 3.178? or 3.17999?
The reason they do this is that for two identical nearby gas staions.
More peple will go to the one advertising 3.17(9), that the one
advertising 3.18(0). Of course this is less of a come on now when a
penny is so little; than when gas was priced at 22 cents and the extra
penny was a sizable amount of money. 22 was clearly less than 23.
Remember that the 9 is always in small type.
What is a more interesting question is when did gas stations start
doing this fractional pricing? It goes back as far as I remember.
Jeff
Lou
<joe1...@yahoo.com> wrote in message
news:1183651519.1...@g4g2000hsf.googlegroups.com...
> What is the rationale to price something as $9.99 instead of $10?
Because people buy more stuff priced at $9.99 than they do when it's priced
at $10.00.
> If tax is to be paid anyway, why isn't it included in the advertised
> price, straightforwardly? If government mandated taxes have to be
> collected in telephone bill, why are they not included in the total
> cost in the advertisement in the beginning, to avoid confusions to the
> consumers that a $20 all-inclusive phone package is actually ended up
> $40 shown in the bill a month later.
It lets companies advertise a lower price, and puts the blame for the higher
price on the government.
clams casino
>
>
> The reason they do this is that for two identical nearby gas
> staions. More peple will go to the one advertising 3.17(9), that the
> one advertising 3.18(0). Of course this is less of a come on now when
> a penny is so little; than when gas was priced at 22 cents and the
> extra penny was a sizable amount of money. 22 was clearly less than
> 23. Remember that the 9 is always in small type.
>
> What is a more interesting question is when did gas stations start
> doing this fractional pricing? It goes back as far as I remember.
>
> Jeff
You must be getting up there in years as the practice dates back to the
late twenties.
Vic Smith
wrote:
>
>One word answer: Psychology.
Wait a minute. I count 4 words there.
Am I missing something?
--Vic
Seerialmom
> On Thu, 05 Jul 2007 09:11:44 -0700, Seerialmom <seerial...@yahoo.com>
> wrote:
>
>
>
> >One word answer: Psychology.
>
> Wait a minute. I count 4 words there.
> Am I missing something?
>
> --Vic
No...Psychology "was" the word. It came after the leading sentence
which was appended by the term "answer" ;) . But that is the answer,
regardless.
SpammersDie
> price, straightforwardly?
For the same reason you don't include your employer's share of FICA taxes
when you negotiate for a salary.
Vic Smith
CazzaG
looking cheaper which works especially well in countries where tax is
included in the price. That is that the cashier will almost always
have to put the transaction through the till to get the penny in
change rather than just putting a $10 bill right in their pocket! I
think it protects the shopkeeper from theft by employees more than
conning consumers into thinking they get a deal.
Rod Speed
> Acutally there's another reason for pricing goods at $9.99 than just
> looking cheaper which works especially well in countries where tax is
> included in the price. That is that the cashier will almost always
> have to put the transaction through the till to get the penny in
> change rather than just putting a $10 bill right in their pocket!
Most countrys with a clue have disposed of the cent now, so there is no change due.
> I think it protects the shopkeeper from theft by employees
> more than conning consumers into thinking they get a deal.
Have fun explaining how come the countrys that have had enough of
a clue to dispose of their 1c, 2c coins, still have those $x.99 prices.
PaPaPeng
wrote:
When cash registers were first used it became possible to get total
sales and sales per transaction. The owner of a bar noticed that the
daily take was a lot less than the volume of liquors dispensed. He
asked the cash register manufacturer (NCR) to find the cause. Through
a spyhole the investigator noticed just the practice you described.
If the price was in full dollars it was very easy for the server to
pocket the money. But if he was forced to make change he had to ring
it through the cash registar and thereby leave a record of the
transaction.
Just before opening time and after closing time the bar manager always
makes a not of the level of the liquor in each bottle. Its a
guesstimate but with practice its a pretty accurate way to track
shrinkage.
Logan Shaw
> If tax is to be paid anyway, why isn't it included in the advertised
> price, straightforwardly?
Two reasons.
One is a practical reason: in the US, there are many different
jurisdictions with the power to set their own sales taxes. It is
quite possible for a newspaper or television station to cover an
area with different tax rates. In a large metropolitan area with
50 suburbs (each of which has the legal power to charge a different
tax rate), is it useful to force advertisements to include all the
possible variations?
The second reason is more important, and it boils down to awareness.
If you include the tax in the price, people have no motivation to
remember the tax rate. As such, they will tend to be less aware of
how much tax the government is taking. Case in point: in the city
where I live, most items are subject to a sales tax of 8.25%.
Gasoline, however, has the tax included in the purchase price. I
have been buying gasoline for 20 years, and I have NO IDEA what
the exact tax rate is. All I know is, it's high. But because I
never have to do the math it's off my radar.
Since governments are fond of increasing taxes whenever they feel
like it, I would argue that it is overwhelmingly worth it to have
to do a little extra arithmetic if in return you get a greater
awareness of how much money the government is taking.
> If government mandated taxes have to be
> collected in telephone bill, why are they not included in the total
> cost in the advertisement in the beginning, to avoid confusions to the
> consumers that a $20 all-inclusive phone package is actually ended up
> $40 shown in the bill a month later.
Because the phone company actively hides that information, because
by and large, American phone companies are a bunch of crooks, and
lazy too. Other businesses are happy to tell you the total with
tax of any purchase, but I've asked the phone company before for
this information, and they refused to give it to me. In fact, they
claimed they didn't even have the ability to determine the taxes!
(I told them that if they can send me a bill with the taxes on it,
then they DO have the ability to determine them.)
> In Europe, every merchandise's price already includes taxes.
Yes, and in Europe, sales tax rates are significantly *higher*! I
personally think this could be related to the fact that the average
man on the street doesn't need to concern themselves with knowing
the tax rate.
I am constantly amazed that Europeans complain when they get to the
US about having to figure the sales tax. You mean to say that
you're willing to pay about 50% more tax (10-15% vs. 6-9%) if only
you don't have to think about it? You're willing to let the government
have another 3% or something out of every dollar you'll ever spend in
your life because it's more "relaxing"?!
- Logan
Logan Shaw
> Jeff wrote:
>> What is a more interesting question is when did gas stations start
>> doing this fractional pricing? It goes back as far as I remember.
> You must be getting up there in years as the practice dates back to the
> late twenties.
Impeccable logic there... He could be 6 years old and still be able to
rightly say "goes back as far as I remember". ;-)
- Logan
Jeff
I thought the same thing, but could not have put it as eloquently as
that! Well done!
Jeff
>
> - Logan
Lisa Drake
Jeff <j...@donotspam.me> wrote:
> In Indiana, sales tax is included in the pump price for gasoline. They
> still price it with the added 9/10 cent.
I'm pretty sure the tax is included in the pump price for gas in most
other states, too. I've never paid more than what was stated on the
pump.
Usene...@the-domain-in.sig
<1183651519.1...@g4g2000hsf.googlegroups.com>,
joe1...@yahoo.com says...
It is psychological. Many people have a poor attention span. So
they see the dollar amount, and gloss over the ".99" part.
I live in a place where the default label includes the tax.
Although sales circulars and flyers can omit it, with a notation
like "Plus GST." Which is sometimes used for advertising higher-
ticket items like computers and appliances. But if a tin of
beans is 99 cents, that includes GST. It is easier, if you only
have a limited amount of money in your pocket or bank account.
But I usually try to keep a cushion, anyway.
It isn't misleading. It is right out there in the open. And the
only connection to Socialist Insecurity is the poor attention
spans and intellectual sloth of the public.
Utilities like phone and electric aren't very competitive here,
so I guess the advertising isn't as prominent as in the US. Tax
is a separate line item on the bills.
--
Get Credit Where Credit Is Due
http://www.cardreport.com/
Credit Tools, Reference, and Forum
Logan Shaw
> In article
> <1183651519.1...@g4g2000hsf.googlegroups.com>,
> joe1...@yahoo.com says...
>> What is the rationale to price something as $9.99 instead of $10?
> It is psychological. Many people have a poor attention span. So
> they see the dollar amount, and gloss over the ".99" part.
It isn't even just that people have a poor attention span. It's more
fundamental than that. Processing information takes time and effort.
It has a cost. It is not practical to always process all available
information. Therefore, the more processing required to get the true
picture, the less likely that everyone does it. If 25% of the people
take in only the dollar part and leave out the cents, then 25% of the
people think your product is roughly $1 cheaper. That is roughly
similar to selling in quantities as if it were priced it $0.25.
More fundamentally, they do it because it works. Pricing is not an
exact science, but many companies employ pricing managers who do the
math behind this stuff. Sometimes it is very elaborate math. Sometimes
it is based on fairly heavy-duty empirical studies.
- Logan
Ben Phlat
one time we did change the price to something other than the price
+9/10 of a cent, it was changed to price+3/10.
--Ben
On Thu, 05 Jul 2007 15:35:31 -0400, Ward Abbott <pre...@terian.com>
wrote:
Ben Phlat
earliest recolection I have the price was 36.9 for regular and 39.9
for premimum, no mid grade back then. You did get blue chip stamps
back then though...........;-)
--Ben
clams casino
>My father owned a service station back in the 60's - 70's and the
>earliest recolection I have the price was 36.9 for regular and 39.9
>for premimum, no mid grade back then. You did get blue chip stamps
>back then though...........;-)
>
>--Ben
>
>
>
Definitely high priced.
I recall < 29.9 being common in the late 60's with a price as low as
19.9 during a price war in the early 70's.
http://dragontail.wordpress.com/2007/05/08/the-big-picture-on-gasoline-prices/
- historical average pricing & adjusted for inflation (2005 dollars).
Interesting to note that 1998 was at historical lows - adjusted for
inflation.