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Odd and Even Pricing Methods Comparison Research Paper

Many businesses use either odd or even pricing formats as psychological tactics to influence customers’ decision-making. The odd pricing technique occurs when a product is priced at an odd-numbered figure (Schindler and Chandrashekaran 512). On the other hand, even pricing occurs when a product is priced at a round figure. Pricing is not just about numbers because it plays a significant role in influencing consumers’ perception. The main objective of this review is to illustrate the differences between even pricing and odd pricing formats. The literature is aimed at discussing specific pricing formats based on odd and even pricing methods. It is aimed at discussing a theoretical framework, which supports the notion that each of the pricing formats influences the perception of consumers.

In order to achieve the above objectives, the following research questions have been developed to guide the review. Which one is the most preferred by customers between odd pricing and even pricing? To what extent do odd pricing and even pricing affect the perception of buyers? Is there a supporting theory for these pricing methods? To answer the research questions, we have analyzed the findings based on two specific pricing formats for odd and even formats. For odd pricing, we have chosen $ 99.99, and for even pricing, $ 100.00 has been selected. The experimental context of the review is based on a clothing store in the European market with a sample of 100 customers who bought clothes from the store.

In the experimental context, 100 male customers were observed based on their perception of the pricing formats. The commodities were priced in odd and even formats. For the purposes of the review, our interest was in men’s black suits that were sold at $ 100.00 dollars and $ 99.99, respectively. From the observation, 75 percent of the customers bought suits charged at $ 99.99, while the remaining 25 percent bought suits charged at $ 100.00. Among those who bought suits charged $ 99.99, 90 percent of them cited the price as the main influencing factor, while 10 percent of the buyers just found themselves buying the oddly priced suits. All customers who bought the $ 100.00 suits cited the quality as the main influencing factor.

Pricing is a complex issue that depends on many things. Many scholars have put specific emphasis on the influence of pricing formats on demands. For instance, using 99 as odd pricing has led to more purchases of a particular product as compared to even pricing ending in 00 (Schindler and Chandrashekaran 514). Odd pricing format does not influence the consumers’ decision to buy but increases the quantity they buy. It does not just increase the product’s demand but also has a stronger influence on the demand for a new product as compared to even pricing (Gauguin and Celine 383). In addition, when customers have limited access to information about the product, odd pricing becomes more effective than even pricing.

In order to support the finding from our experiment context, we have used the prospect theory to justify the influence that pricing format has on consumer’s sensitivity. The theory illustrates that undecided consumers are lured by price value based on loses and benefits provided by the price with respect to a given reference value (Wagner and Beinke 345). It supports the notion of customers being highly sensitive to losses than they are to gains. Consequently, a customer perceives a few cents below a whole unit as a benefit. This explains the reason why 75 percent of sample customers bought odd priced suits, as compared to 25 percent who bought even priced suits. Making price choices based on differences in figures depends on the value of the left-hand figures. This is a behavioral feature called the effect of the left-digit anchoring (Wagner and Beinke 349). This is the reason why the suit customers preferred 99.99 to 100.00. This can be explained that their decisions are based on the most significant digits from left to right.

Consumers will develop the tendency to pay no attention to the least significant figures. This effect may be achieved when the seller prints these cents in a small font-size, for example, $99.99 (Boyes, Lynch, and Mounts 1134). Retailers should set their prices to end in digit 9. This is important unless they have a fear of possible negative effects. Odd pricing, as opposed to even pricing, is unlikely to level the actual threshold of demand in consumers’ responses. Consumers develop an unfriendly perception about single digits at a price as compared to a several-digit price. Customers are less affected with an even or whole value when making brand choices than with odd value. In particular, Western consumers process the price digits from the left side to the right (Brekke and Tor 627).

For instance, an even price of 100.00 would attract fewer customers to buy a certain quantity of a product as compared to an odd price of 99.99. This happens because their perception is influenced more by digit nine on the left side than digits 99 on the right side (Wagner and Beinke 342). This explains the reason why consumers are attracted more by odd prices than even or round figure prices. The left-right processing of a product’s information explains the reason why consumers subjectively recall ending odd digits. The concept of price and quality in the context of odd versus even prices has also been the center of focus for researchers. There is a distinction between the effects of price endings on the image and level (Kinard and Michael 87). The effects of price on level make consumers round up prices down by essentially ignoring the right-hand side digits.

On the other hand, the effects of the image make consumers distinguish meaning from the commodity’s price. For instance, digit 0 for even prices on the right hand demonstrates higher quality, while digit 9 for even prices demonstrates a good quality (Königbauer and Straume 651). Based on the analysis of the perception of consumers about the advertised product quality with prices ending with 99, consumers consider the prices low. This occurs because they demonstrate an aspect of discount (Schindler and Chandrashekaran 518).

However, to consumers who are sensitive about the product’s quality, digit 0 for even price ending is more preferable than digit 99 for odd price ending. On the other, price endings may not signal the product quality (Stiving 1623). However, business organizations use even-numbered prices with digits ending in 0 to signal the quality of a product.

Irrespective of the mixed results given by different researchers about even pricing and odd pricing, it is a fact that the formats influence the consumers’ perception. It is clear from the studies that more business organizations prefer to use odd pricing method instead of even pricing. The literature clearly demonstrates the broader use of odd prices that end in 99 than even pricing that ends in 00 (Kinard and Michael 92). The odd method of pricing is common with basic products such as foodstuffs, clothes, and grocery products, among other essential commodities. On the other hand, even pricing is common with high-valued items like vehicles and machinery. Many research studies reveal that price ending has a substantial influence on the trend of demand and purchases (Königbauer and Straume 629). In general, the odd pricing increases the purchase of a product more than even pricing.

Works Cited

Boyes, William, Allen, Lynch and Stewart Mounts. “Why Odd Pricing?” Journal of Applied Social Psychology 37.5 (2012): 1130-1140. Print.

Brekke, Kurt and Tor Helge. “Reference pricing, competition, and pharmaceutical expenditures: Theory and evidence from a natural experiment.” Journal of Public Economics 95.7-8 (2011): 624-638. Print.

Gauguin, Nicolas and Jacob Celine. “Nine-ending price and consumer behavior: an evaluation in a new context.” Journal of Applied Sciences 5.2: (2005): 383-384 Print.

Königbauer, Ingrid and Odd Rune Straume. “Reference pricing of pharmaceuticals.” Journal of Health Economics 26.3 (2011): 613-642. Print.

Schindler, Robert and Rajesh Chandrashekaran. “Influence of price endings on price recall: a by-digit analysis”. Journal of Product and Brand Management 13.7 (2004): 511-521. Print.

Kinard, Brian and Michael Capella. “Odd pricing effects: an examination using adaptation-level theory.” Journal of Product & Brand Management 22.1 (2013): 87-94. Print.

Stiving, Mark. “Price-endings when prices signal quality.” Journal for Management Science 46.12 (2000): 1617–1629. Print.

Wagner, Ralf and Kai-Stefan Beinke. “Identifying patterns of customer response to price endings.” Journal of Product and Brand Management 15.5 (2006): 343-351. Print.

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"Odd and Even Pricing Methods Comparison." IvyPanda, 25 May 2020, ivypanda.com/essays/odd-and-even-pricing-methods-comparison/.

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IvyPanda. "Odd and Even Pricing Methods Comparison." May 25, 2020. https://ivypanda.com/essays/odd-and-even-pricing-methods-comparison/.


IvyPanda. 2020. "Odd and Even Pricing Methods Comparison." May 25, 2020. https://ivypanda.com/essays/odd-and-even-pricing-methods-comparison/.


IvyPanda. (2020) 'Odd and Even Pricing Methods Comparison'. 25 May.

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