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

Journal of the Association for Consumer Research, Volume 6, Issue 1 - Special Issue on Behavioral Pricing, 2019

130 Pages Posted: 28 Oct 2019

See all articles by Avichai Snir

Avichai Snir

Netanya Academic College

Daniel Levy

Bar-Ilan University - Department of Economics; Emory University - Department of Economics; Rimini Center for Economic Analysis

Multiple version iconThere are 2 versions of this paper

Date Written: October 18, 2019

Abstract

9-ending prices, which comprise between 40%–95% of retail prices, are popular because shoppers perceive them as being low. We study whether this belief is justified using scanner price-data with over 98-million observations from a large US grocery-chain. We find that 9-ending prices are higher than non 9-ending prices, by as much as 18%. Two factors explain why shoppers believe, mistakenly, that 9-ending prices are low. First, we find that among sale-prices, 9-ending prices are indeed lower than non 9-ending prices, giving 9-ending prices an aura of being low. Second, at first, 9-ending prices were indeed lower than other prices. Shoppers, therefore, learned to associate 9-endings with low prices. Over time, however, 9-ending prices rose substantially, which shoppers failed to notice, because the continuous use of 9-ending prices for promoting deep price cuts draws shoppers’ attention to them, and helps to maintain-and-preserve the image of 9-ending prices as bargain prices.

Keywords: Behavioral Pricing, Psychological Prices, Price Perception, Image Effect, 9-Ending Prices, Price Points, Regular Prices, Sale Prices

JEL Classification: M30, M31, L11, L16, L81, D12, D22, D40, D90, D91, E31

Suggested Citation

Snir, Avichai and Levy, Daniel, If You Think 9-Ending Prices are Low, Think Again (October 18, 2019). Journal of the Association for Consumer Research, Volume 6, Issue 1 - Special Issue on Behavioral Pricing, 2019. Available at SSRN: https://ssrn.com/abstract=3472066

Avichai Snir

Netanya Academic College ( email )

1 University St
Netanya 42100, 4223587
Israel

Daniel Levy (Contact Author)

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 5290002
Israel
+972 3 531-8345 (Phone)
+972 3 738-4034 (Fax)

HOME PAGE: http://econ.biu.ac.il/en/levy

Emory University - Department of Economics ( email )

1602 Fishburne Drive, Suite 306
Rich Building
Atlanta, GA 30322-0001
United States

HOME PAGE: http://economics.emory.edu/home/people/faculty/Levydaniel.html

Rimini Center for Economic Analysis ( email )

Wilfrid Laurier University
75 University Ave W.
Waterloo, Ontario N2L3C5
Canada

HOME PAGE: http://rcea.org/

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