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PRICING – CHAPTER 30 Pricing Strategies WHY DO SO MANY PRICES END IN 99?

PRICING – CHAPTER 30 Pricing Strategies WHY DO SO MANY PRICES END IN 99?. Psychological Pricing. Creates an illusion that you are getting a bargain. Odd – Even Odd Number = Bargain Even Number = Quality Even Numbers – no cents displayed Example: $50 . 2. Prestige

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PRICING – CHAPTER 30 Pricing Strategies WHY DO SO MANY PRICES END IN 99?

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  1. PRICING – CHAPTER 30 Pricing Strategies WHY DO SO MANY PRICES END IN 99?

  2. Psychological Pricing • Creates an illusion that you are getting a bargain

  3. Odd – Even • Odd Number = Bargain • Even Number = Quality • Even Numbers – no cents displayed • Example: $50

  4. 2. Prestige • Pricing higher than average to suggest status & prestige

  5. 3. Multiple Pricing • 3 items for $.99 • 10 items for $10

  6. 4. Promotional Pricing • Loss leader • Increase sales traffic • Offer popular product for low price $847.99 $647.99 • Special Event • Reduced for short • period of time • Presidents Day sale

  7. 5. Price Lining • Offers all merchandise in a given category at certain prices • Examples:

  8. Discount Pricing • Reductions from usual pricing

  9. 1. Cash Discount • Encourages customers to pay bills quickly • Example: 2/10, net 30 days • 2% off total bill if paid within 10 days • Otherwise total bill must be paid within 30 days • Landscaping Company • Total bill = $1,000 – 3/10, net 30 days • Customer pays the bill within • 10 days • What is the amount the customer owes? • $1,000 x .03 = $30 • $1,000 - $30 = $970

  10. 2. Quantity • Place large orders • People usually buy more than planned

  11. 3. Seasonal • Buy in advance of buying season • Leftovers – better to sell at a discount than to store items in a warehouse

  12. 4. Promotional • Offered to wholesales/retailers what are willing to advertise their products • Example: • Gas Stations

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