• Listen to podcasts
  • Download BizTakeouts Mobi App

Subscribe to industry newsletters

Why the 99c pricing policy?

Since the demise of the 1 and 2 cent coins, why do retailers still advertise goods with 99c tagged on the end?
Last night a Pep Stores ad really got to me. A pair of boys' jeans advertised at R39.99. When the goods are rung up the till rounds it down to R39.95 anyway, so why not just advertise the damned things at R39.95 anyway? Are the powers that be so dumb that they can't figure out that R39.95 is lower than R39.99? Surely the real selling price being lower than the advertised price is more attractive to consumers?
Get a daily news update via WhatsApp or sign up to our newsletters.
Do the math-
If you buy only 1 item at say 99c, and it gets rounded off to 95c, it's a 4c difference. But lets say you buy 20 items at 99c, that comes to R19,80. If those items where all 95c, it would only come to R19,00. Those 4c per item, versus 4c per transaction will make a big difference to something like a supermarket, since they sell thousands of items daily. Well, that's my 4c.
Posted on 4 Jul 2006 10:29
Advertising is starting to be annoying than convincing. this is just a good example of annoying advertising.
Posted on 4 Jul 2006 16:12
Pricing 99c -
Agreed - its pointless. Any logical consumer surely would'nt think .99c is cheaper than the rounded value!
Posted on 4 Jul 2006 16:14
Andy Ray
You are getting back - a bit more-
It goes back to the adage that you are getting back - just that little bit more - be it 4 cent or less, you are getting back some hard earned money
Posted on 4 Jul 2006 16:18
Apple Seed
Nice one, advertising people, not strong on finance-
Nice one, advertising people, not strong on finance
Posted on 4 Jul 2006 17:13
I agree. Stores should advertise the price chargeable. Some stores still don't give you the correct change
Posted on 5 Jul 2006 07:14
All about perception-
Guys, the fact remains that consumers are not rational when the purchase. A price point of R39.99 appears cheaper to the the consumer than if the same product were R39.95. As a result, the increase in sales is what convinces retailers to continue to advertise at the 99c price point. It's that simple, it's all about perception
Posted on 5 Jul 2006 08:28
99c not always true-
Well stores round it off unless you pay with a card, and I have seen it on a few occasions that when you pay with a card, its not rounded off.
Posted on 5 Jul 2006 09:24
Doesn't the reserve bank give retailers the difference? I know they did when the currency first changed. Has this been stopped? I personally agree that 99c has been, over the years, branded into our brains and is going nowhere quickly!
Posted on 5 Jul 2006 09:32
I studied Retail Business Management at Technikon more than 10 years ago. I learnt in Cuncumer Behaviour & Advertising which were my subjects at the time that it gives the consumer the perception that it's cheaper. If two retailers advertised the same product, one retailer sells at 99c and the other at R1, a lot of consumer would by the 99c thinking it's cheaper.
Posted on 5 Jul 2006 09:53
We were NEVER fooled-
Retailers have always been under the misguided impression that the purchasing public are a bunch of morons and will purchase an item at R19.99 but not at R20. Perhaps in the days of yore when spending a penny was required for public toilets, it was worthwhile getting the penny change but that is long gone so getting a cent change has for years been more than annoying. Now that there are no 1c pieces it is not only annoying it is plain stupid as they are going to charge us R20 anyway.
Posted on 5 Jul 2006 10:26
Um.....yet again-
The only point some of you are STILL missing is that the pricing is there to make sales, because consumer behaviour with a dollop of psychobabble means that the retailer who does .99 will sell more than the one who didn't. Has the penny dropped yet? You may not like it, you may not be the target market, you not have been fooled (well done) - point is it works, so let's stop debating a moot point.
Posted on 5 Jul 2006 12:39
we know the different b/n 99 and 1 ........ yet again!-
i agree with louise. i know that i won't get any change from my R20 if i buy sumthing priced at R19.99. come on... are consumers that stupid? maybe if i could buy a sweet with a cent, or 5c for that matter, then i would go for a 99c product and run far away from a R1 one. it's the same thing ppl cum on....
Posted on 5 Jul 2006 14:56
I think it's psychological-
Disclaimer: I have no research to back this up, but these are my thoughts on the matter: Even tough it doesn't make a big difference in your pocket, it makes a big difference in your mind. We read from left to right, so if you read a price, like R19.99, the first number you see is the '1'. If the price is R20.00, the first number you see is '2' - big difference between 1 and 2! What's the difference between being 39 and being 40? Not much, but going from being in your 30's, to being in your 40's!! OMG! Queue midlife crisis! Remeber how upset everyone got when petrol went into the R6 bracket. Even though the price before was R5,90 or something, the psychological barrier was crossed between paying R5-something, and R6-something. Well, that's how I see it. If anyone feels like I'm talking sh!t, it's cause I most likely am. Please read the disclaimer at the top of the post again. :)
Posted on 6 Jul 2006 10:16
sipho magagula
Tradition dies hard-
This is just a tradition that retailers have been stuck with for years. Like all traditions it does not need a compelling reason for its existence. People in informal businesses do not follow this tradition.
Posted on 11 Jul 2006 10:02
Why the 99c pricing policy-
It's a really stupid concept. But I think the market players want the public to think that they'll get a 4c discount on every purchase that is priced at a cost plus 99c. In all fairness all prices should be rounded-off. Its like people wanting change but then the change scares the hell out of them.
Posted on 19 Jul 2006 12:40
Ag, who wants a heavy handbag anyway?-
Personally, when I see an item for, say, R19.99, in my mind I always round it up anyway. I also round it up if it's anything over R19 - even R19.47, for example (not that there's much of that sort of pricing, but you take my point, I hope.) More realistically, if something is going for R179.99, I'll think of it as R200 - end of story. Whether I'm paying by credit card or not. Yeah... I have an extremely heavy handbag. ;-)
Posted on 29 Jul 2006 18:07
…this 99c thing!-
As far as I'm concerned this ploy is pathetic. The only thing a 99c price does is chase me to an alternative product! Advertisers have for many many years made out as though consumers are brainless idiots who cannot think for themselves. For decades, we've been pleading for quality & fair price. These days we pretty much have to accept the opposite. My absolute favourites are car prices such as R 259 999.95 etc. In my brainless head, I automatically round it up to R 260 000 and think, sorry guys, firstly you insult my intelligence. Secondly the cars too darn expensive anyhow. Thirdly, I just know I'm being badly ripped off!
Posted on 30 Jul 2006 21:10
2B Marketing
It's still R39,99 when you pay by credit card....-
The price is only rounded down when the customer pays by cash. If you pay by credit card, you pay the full amount - and lots of people use credit cards these days... However, for the sake of some of the four cents extra I think that the idea of R39,95 would still be a better marketing proposition. Ann
Posted on 6 Aug 2006 15:25
To Clear this up...-
The reason the price is 99c and not 95c is so that the teller has to open their till thereby registering the sale to give you change. Because they don't make 1c coins anymore no one can pay the exact amount and if you have to pay 95c some people will pay the exact amount and the teller could get away with not ringing up the sale and pocket the money without anybody ever knowing. Well its a thought atleast...
Posted on 12 Aug 2006 19:29