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What is odd even pricing?
Odd even pricing is a specific pricing strategy that involves altering the last digits of a product or a service to have an odd number in the price. Respectively, prices ending with an odd number, for instance, $9.99 or $25.25, are directly linked to an odd even pricing strategy. Similarly, odd even pricing includes prices ending in a particular even number, for example, $100.00 or $19.50, also known as an even part of the pricing strategy.
Essentially, it is a psychological pricing strategy that involves the particular perception of how customers perceive the price. The key aspect is to make the price ranges appealing to a specific set of buyers. The original intention for odd even pricing stemmed from the desire to force cashiers to open cash registers to give up change to customers. For example, when the price for a product is $4.85, there is a high probability that a customer will pay $5, and the cashiers need to offer a chance by opening the cash register, thus recording the sale. If the price is an even $10, a cashier can easily pocket the money without even opening a cash register.
At this point, odd even pricing was created as a psychological tool with several key purposes. On the one hand, it forces cashiers to register the sales. On the other hand, it grants customers the false perception that the product is cheaper than it is. Using odd prices can be beneficial on many fronts.
Odd even pricing examples
One of the key examples of the pricing strategy correlates to how customers perceive prices and numbers. For instance, if a product costs $50, there are no possible perspectives because the price is straightforward. If you reduce the price by only 1 cent and make it $49.99, there is a change in perception. Keeping that in mind, even a slight reduction in price offers a massive shift in perception. Using such an odd even pricing strategy ensures that a company receives a better perception of price while not significantly altering it firstly.
When it comes to companies using odd pricing, one can look at Kay Jewelers. The business sends a message that every customer deserves to get glamorous jewelry at affordable prices. While delivering its promises, the company managed to employ an odd even pricing strategy. One of its marketing messages offers gifts under $199 or particular jewelry priced at $24.99. Even though the prices might not be as appealing as Kay Jewelers indicate, the simple psychological trick of making prices odd creates an impression of affordability. In contrast, Tiffany & Co does not focus on affordability. That is why the company uses even prices like $2,100. Here are several examples of odd and even pricing.
In such a context, there are different approaches to odd even pricing. There are various strategies used to achieve different marketing approaches. Based on the vision and mission of the business, one can choose oddly or even pricing strategies.
Odd pricing advantages and disadvantages
There are particular advantages and disadvantages to odd pricing. When exploring the key aspects of the strategy, it is crucial to start from the potential benefits:
- Motivating impulse purchases. Setting odd prices, for instance, $19.99, encourages people to buy without additional thought. When seeing a low price, it is more likely a person will purchase a product without thinking twice. Interestingly, odd pricing often resonates with the notion of a discount for consumers. Keeping that in mind, the integration of odd even pricing changes how people perceive the overall cost of the purchase.
- Encourage larger buys. Naturally, if people perceive prices as they view discounts, it is more likely that consumers will buy more products. Ending a price in an odd number makes it hard for people to add up the total cost of the purchase. The reality shows that customers will stop making up estimates of their purchases, which results in a higher number of buys.
- Propagating marketing approaches. Using odd even pricing is a great way to navigate one’s marketing approach. If your company focuses on offering affordable prices, using odd prices will help. In contrast, if your value proposition emphasizes uniqueness, it might be best to use even pricing.
- Boosting customer’s perception. Using odd pricing strategies can help alter consumers’ purchasing behavior. Essentially, sellers can turn consumers toward specific products and services by creating a particular vision of prices. At this point, it is possible to propagate further certain products that can be beneficial to every given shareholder involved.
While using odd prices may seem like a panacea for marketing and pricing strategies, particular aspects should be regarded as issues. Here are the disadvantages of odd even pricing strategy:
- Damaged brand perception. With odd even pricing, customers buy products because they like the price and not particularly the product itself. In such a case, the strategy indicates that consumers’ degree of retention won’t be high. When the prices change, the customers will return to other products, which can be extremely problematic for a company’s profits.
- Incorrect perception of value. Companies create a coercive perception of value by using odd prices to present them as discounts and even prices to illustrate products as luxury. Keeping that in mind, putting too much emphasis on odd and even prices can create a false perception of a product's value.
- Miscommunication and misinformation. Companies' odd even pricing strategies to push customers toward certain products create a coercive vision of what businesses offer. Namely, even if products do not have proper value, companies can use odd even pricing to create a vision of artificial value because of the pricing used. Such an approach misinforms consumers, which can be perceived as manipulation.
Odd even pricing can be harmful and beneficial. It all depends on the conditions upon which it is employed and the motivation of companies.
How to build an odd even pricing strategy
There are several key factors to consider when it comes to the basics of odd even pricing strategy.
- Use even prices while giving odd discounts.
- Create memorable prices.
- Do not coerce the perception of value.
These aspects will help propagate a beneficial odd even pricing strategy.
Odd even pricing strategy changes the perception of prices and helps companies direct consumers’ purchasing behaviors. Yet, there are advantages and disadvantages to the approach. Getting a proper odd even pricing strategy as a marketing and pricing tool depends on how well businesses propagate products’ value and respect consumers’ purchasing attitudes.
What is odd even pricing?
Odd even pricing is based on setting odd prices and even prices to attract consumers.
What are odd even pricing examples?
Setting prices like $9.99 to present it as a discount or presenting prices like $20 are key examples of the strategy.