Numerical encoding and odd‐ending prices

Abstract

The practice of pricing with numbers ending in nine (“nine‐ending”) has been little studied. It now seems well established that, under certain conditions, the practice of such pricing strategies has a particular effect on sales, especially inciting the customer to buy products that are more expensive. The research design for explaining such an effect would depend on the price encoding mechanisms, namely, the emphasis of focusing attention, which decreases when reading from left to right, leading to only partial memorization of the price. This would favour the leftmost digits, thus leading to errors of evaluation or estimation of the starting price. A new experiment was carried out to test this possibility. Subjects had to estimate the discount rate of products in a sale, according to whether the starting price was a “rounded” figure or “odd‐ending”. Assuming the first digit of the price is memorized, we might expect that a round starting price leads to an overestimation of the amount of the offered discount. The results provide evidence in support of this hypothesis, enabling us to gain a more accurate knowledge of the processes used for estimating the starting price.