Never too rich to care about prices: Effects of price endings on customer perceptions of luxury

Abstract

In this article, we build on the existing literature on price endings in the fast-moving consumer goods and luxury pricing to highlight the potential paradox of adopting odd pricing (i.e. setting prices just below the round number) for luxury goods, which should mostly use even pricing (i.e. round numbers). In a first experiment concerning luxury handbags, we test the impact of three types of price endings (–90, –00, and “other”) on luxury image and its sub-facets. We propose four mediators of the relationship between price endings and overall luxury image, that is, quality, prestige, uniqueness, and expensiveness. In a second experiment, we find that price endings have connotations specific to the luxury sector and to different segments of consumers. We conclude with recommendations to help pricing managers strategically adjust their price-ending practice to target different consumer segments.