Menu prices ending in .95

[Nick]

I talked to a guy who ran a wine store for a couple of years and he said that when they opened up, they decided to do away with the "X.95" pricing and just put it up to the next dollar.  The switched back after a few months because they found that people were deterred by a $10 wine whereas that had no problem with a $9.95 bottle.  Odd.

We do need a shrink to come in here and give an answer. There's just something about nipping the price up a nickle and rounding it off to an even dollar that puts people off.

What is it? I've gotten so used to the scam that I don't know if I could handle the $xx.00 myself.

It even goes into new car pricing. The price is not $35,000; it's $34,995.

[nightscotsman]

I talked to a guy who ran a wine store for a couple of years and he said that when they opened up, they decided to do away with the "X.95" pricing and just put it up to the next dollar.  The switched back after a few months because they found that people were deterred by a $10 wine whereas that had no problem with a $9.95 bottle.  Odd.

We do need a shrink to come in here and give an answer. There's just something about nipping the price up a nickle and rounding it off to an even dollar that puts people off.

What is it? I've gotten so used to the scam that I don't know if I could handle the $xx.00 myself.

It even goes into new car pricing. The price is not $35,000; it's $34,995.

It's really not so difficult to understand. The vast majority of people are deeply, deeply lazy when it comes to using their brain (do NOT get me started on who's in the White House and the idiocy of the impending "tax cuts"). If it takes an extra split second to calculate the total price of rounding up a nickel, then that is simply too much work. I'm not saying that people are stupid, just that it's easier and faster to think less.

[elyse]

If and when I open my place, I'll have pricing by the quarter.

[bigbear]

..... If it takes an extra split second to calculate the total price of rounding up a nickel, then that is simply too much work. I'm not saying that people are stupid, just that it's easier and faster to think less.

If an expert ever does chime in, I'm willing to bet that it's more of a visual thing. Once seen, the "34" of $34,995.00 somehow makes a lasting impression, even if one does mentally recalculate.

[tommy]

..... If it takes an extra split second to calculate the total price of rounding up a nickel, then that is simply too much work. I'm not saying that people are stupid, just that it's easier and faster to think less.

If an expert ever does chime in, I'm willing to bet that it's more of a visual thing. Once seen, the "34" of $34,995.00 somehow makes a lasting impression, even if one does mentally recalculate.

agreed. but most peoples brains are programmed to not do that when the numbers are so small. we're not shopping around for pasta dishes when we go out to eat. if anything, we remember the final bill, and not the prices of the individual dishes. i think it's just a case of people being followers and not leaders.

[jhlurie]

Steven... what makes you think this is a restaurant exclusive "problem"? Retail stores used the .99/.95 cent scheme for years before restaurants ever did, and actually I'm pretty sure that fast food outlets may have been in there pretty early as well. And the auto pricing example, which someone already gave, goes back a long way too.

I seem to remember something about this from a psych class I took about 15 years ago. As tammylc has already said, it's got something to do with an unconscious calculation to a lower number. People see $24.99 and at least some of them stop after the first two digits and think "$24" instead of "$25".

Think about .99 cent stores. Is .99 a significantly better deal than, let's say... $1.07? But with .99 the mind is thinking "its almost free". With a $1.07 on the price tag its frequently thinking... "well... I've got to use two dollar bills to pay for this".

[The Camille]

I'm with Holly too - it works, however annoying it might be to some people.

But .95 isn't the way to go, if you go there. All price points should end in .99

Multiply the number of items you sell annually that end in .95 by four cents -- that's the impact this change could have on your annual income.

In volume sales, it can be a significant amount, with the same psychological benefit as the .95....

So .95 makes no sense at all. Am I missing something?

[hollywood]

You see the reverse of this phenomenon in eBay bidding. Bidders frequently offer X dollars and some cents in order to outfox folks who bid in even dollars.

[Lyle]

Especially in lower priced cash only places, I prefer the odd coin value ($3.73) that, when taxed, eliminate the need for coins being involved at all.

[WHT]

Some people just don't trust round numbers!

[Holly Moore]

I'm with Holly too - it works, however annoying it might be to some people.

But .95 isn't the way to go, if you go there. All price points should end in .99

Multiply the number of items you sell annually that end in .95 by four cents -- that's the impact this change could have on your annual income.

In volume sales, it can be a significant amount, with the same psychological benefit as the .95....

So .95 makes no sense at all. Am I missing something?

It depends on the level of cuisine. $1.99 is fine for a hot dog. $23.99 doesn't seem appropriate for seared tuna.

[The Camille]

It depends on the level of cuisine.  $1.99 is fine for a hot dog.  $23.99 doesn't seem appropriate for seared tuna.

I know what you mean. It's more applicable to low-end menu pricing, isn't it....

But then, when is the .95 price point a good idea? Does $23.95 sound more 'genteel'? If so, why? (that was the jist of my question - my lack of clarity there)

Edited May 19, 2003 by The Camille (log)

[chaste_nosferatu]

I remember an economics history class in which the prof. stated this whole thing was started by Sears and Roebuck in their catalog heyday as a way to collect the tax on whole dollar amounts as that was how the taxes were calculated but then got to keep the two pennies from every item ordered. For the visual learners in our midst it went as follows...

item cost 1.98

5% tax, taxed at two dollars would make the total 2.10 (they were on an ordered schedule)

sears paid the ten cents to Uncle Sam leaving 2.00

they kept two cents of every order tax free.

[mamster]

Has anyone mentioned that you know you're in a cool restaurant when the prices are in whole numbers with no trailing decimal places, just a decimal point? Like:

goat bisque 7.

saddle du cheval 23.

Either they're cool or they want to be cool.

[Peter B Wolf]

Years ago, when I was costing out menus, I always settled for a 'so called standard':

Items up to $ 5.00, could be either .25, .50, .75 or .95

Items from $ 5.00 to $ 10.00, were .50 or .95

Items up to $ 20.00 always .95

And anything over $ 20.00 always a full .00

Also, no "funny" numbers above $ 10.00 (like 11., 13., 16., 17. or 18. (95).

It worked with me