Why Wal-Mart Doesn't End Prices w/ 99

29 replies
Saw this article on pricing and thought others might benefit from it.

Psychology of Shopping: Why $29.99 Looks Better Than $30

Garrie
#end #prices #w or #walmart
  • Profile picture of the author JonWebContent
    Yep, that's why gas prices are 2.999 and not 3.00.

    Wal-Mart doesn't have to sell like that. Why? Because everyone ALREADY thinks of Wal-Mart as a low-price store. It's their schtick.
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    • Profile picture of the author WILLIELOITER
      Honestly, I was always kinda wondering why walmarts always have things at that margin of price no 4.99 for a shirt or 12.99 for some walmart shoes. lol Makes sense now
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      • Profile picture of the author yourreviewer
        Originally Posted by WILLIELOITER View Post

        Honestly, I was always kinda wondering why walmarts always have things at that margin of price no 4.99 for a shirt or 12.99 for some walmart shoes. lol Makes sense now
        Did you READ the article entirely?
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  • Profile picture of the author JasonTai
    Not sure if Wal-mart still does but they use to have certain cent numbers relate to a meaning

    example XX.77 might mean the item is one sale

    XX.97 might mean no longer ordering more of these items

    And so on
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  • Profile picture of the author astnpwrz
    Always low prices...always LOL. I read about this somewhere before. I cant remember where though. It was concerning IM though. like why people charge $997 instead of $1000 etc. If people are still doing it, then it must be working.
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  • Profile picture of the author J Bold
    Walmart doesn't do this because of some exec who just died recently, it was his idea. I know because I was reading his bio in the Walmart magazine for associates, as my cousin works at Walmart. I found it interesting. Can't remember his name or his exact position, but he was also the one who pusehd Walmart to have it's own satellite communications system to connect stores to each other and the home office, and now it's a huge system of communications, second only to the government, I think.

    But anyway, ya like the article says the point was to show more fair pricing and price items at more or less exactly what they should be to be fair to the consumer, giving Walmart shoppers that feeling that Walmart is giving them the best possible deal. Of course, it may not always be true but since that's what Walmart's all about of course they want the shoppers to think that!
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    • Profile picture of the author Kay King
      Because a company of WM size does its own testing rather than relying on the same info that's been published for years.

      Look at the supplements and vitamins on WM shelves. The main brands are often with the .99 cents at the end. The generic WM Equate brand is more likely to be $4.00 or $8.00 - sets it apart.

      kay
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  • Profile picture of the author Doran Peck
    I've come to the conlcusion that 50% of the stuff on walmart shelves is cheap crap that breaks easy.

    They've gotten away from real value and have prioritized squeezing the profit margin and choosing to carry the cheapest made products all for more of the squeezing.

    They are big enough now that it probably doesn't matter how scientific they get with their pricing...people are going to shop there regardless.
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    • Profile picture of the author Bill Farnham
      This is why you don't believe everything you read on the internet...

      Walmart doesn't use whole dollars for pricing but uses odd price points such as $7.83 and $12.47 because the numbers give consumers a feeling of value.
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      • Profile picture of the author GarrieWilson
        Originally Posted by Bill Farnham View Post

        This is why you don't believe everything you read on the internet...
        They should have said doesn't always.

        If you goto the stores they are doing more and more with mixed prices. Especially their branded generics.

        -g
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      • Profile picture of the author tpw
        Originally Posted by Bill Farnham View Post

        This is why you don't believe everything you read on the internet...

        Instead of taking this stuff on face value, why don't we test it ourselves?
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        • Profile picture of the author Silas Hart
          I've been off again and on again writing a book about the subject of pricing and relating it to digital products.

          It's different for each place selling an item, because it's different to each demographic.

          Here's a tid bit about Walmart and why they offer various ending prices. Aside from the fact that Walmart can determine profit by a fraction of a penny, the typical walmart shopper makes less than $40,000 a year, and more commonly make less than $30,000 year depending on the location. This relates loosely to the calculation skills of a shopper. Shoppers don't round up, they round down. If a necessity like socks cost $8.47, a shopper thinks that its only costing them $8.00. If a shopper has a budget of $50, they will gather enough items to where they think that they have $45, so they will often buy another $5 item. Often, the last item someone purchases is a luxury item, which is why you often find candy and other stuff not necessarily in a the check out isle (but it is there), but in a huge row of stuff like candy. Walmart has recently changed this to replace stuff like candy with womens clothing (for an obvious reason) because their profit margin on womens clothing is so huge. Often a shirt that costs $14.99 might only cost the store $2.00. (An Edit for Bill Farnham)

          There's a pretty big marketing based difference between the numbers 0, 1-3, 4-6, 7, and 8-9, most of which does Not really affect selling digital products as a whole, but my studies have made a Huge difference on eBay.
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      • Profile picture of the author J Bold
        Originally Posted by Bill Farnham View Post

        This is why you don't believe everything you read on the internet...
        Hmmm, yes, they do use whole dollars with some items, but they also use the odd pricing much more than other retailers do, and they feel they are some kind of pioneers in pricing a can of tuna for 62 cents, some beans for 73 cents, etc.

        So, yeah, they do both...
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  • Profile picture of the author BloggingPro
    The 99 deal is really interesting at a car dealership. I've caught myself many times looking at a car that is $17,999 as being just seventeen-thousand-dollars, when in reality its really 18 thousand.

    What I want to know is why do the Gas Stations still put the stupid 9/10 at the end.
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  • Profile picture of the author smartalex4
    I guess I must be odd.....I've always rounded up not down.
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  • Profile picture of the author JoshuaZamora
    Thank you for sharing this! The great wonders of the human mind 8)
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    • Profile picture of the author Zachmo
      Oh i see, that is also why those home tv shopping stuffs always have a price that ends with .99. But what ever the price is whenever it has a decimal I always intend to round it up.
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      • Profile picture of the author Bill Farnham
        Originally Posted by FaJeeb View Post

        Often a shirt that costs $14.99 might only cost the store $00.12.
        As someone who has designed products for companies that are selling those items in WM I can tell you this is total bunk.

        You can't even source the packaging for a great number of small items for that price, much less the cost for material and manufacturing for a clothing item like a shirt.

        Folklore, you gotta love it. :rolleyes:

        ~Bill
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        • Profile picture of the author Silas Hart
          Originally Posted by Bill Farnham View Post

          As someone who has designed products for companies that are selling those items in WM I can tell you this is total bunk.

          You can't even source the packaging for a great number of small items for that price, much less the cost for material and manufacturing for a clothing item like a shirt.

          Folklore, you gotta love it. :rolleyes:

          ~Bill
          Alright, I'll be honest, the number is actually between $1 and $2 if labor is included. The fact that machines are now capable of making shirts now actually does lower that number a bit. I've read online that it costs Walmart $4 or $5, and that's bogus.

          I lived near a clothing factory in Changsha that recently relocated to Vietnam that mostly made jackets, and I've come across a Lot of ex-employees that manufactured goods for WM.
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  • Profile picture of the author AFI
    I always fall for this psychology. When I see $6.99 I think it is $6.00 instead of $7.00. So it does work to this day even though it's a well known fact that they do that.
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    • Profile picture of the author paulie888
      Originally Posted by AFI View Post

      I always fall for this psychology. When I see $6.99 I think it is $6.00 instead of $7.00. So it does work to this day even though it's a well known fact that they do that.
      That's exactly how the article was explaining this! Apparently the majority of consumers round the price down instead of up, and this phenomenon is why you see so many items at discount stores priced with the .99 at the end.
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      • Profile picture of the author Martin Luxton
        I found this interesting

        Busy consumers will try to make decisions based on value, and since we read from left to right, the most important numbers are always on the left. So you're more likely to notice the first number when something is $9.99 and think it's a much better deal than $10 because nine is less than 10. Your mind discards the rightmost digits to save mental energy and time.
        Does this mean in languages which read from right to left, .99 prices are a sales disaster?

        Martin
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  • Profile picture of the author Keith Everett
    Hi Guys

    Does anyone know the pricing psychology behind IM products ending in 7?
    i.e $7 $17 etc etc.... even $497, $1497 & $1997

    Keith
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    • Profile picture of the author Silas Hart
      Originally Posted by kweb777 View Post

      Hi Guys

      Does anyone know the pricing psychology behind IM products ending in 7?
      i.e $7 $17 etc etc.... even $497, $1497 & $1997

      Keith
      7 is associated with being a middle number, being between 1-10. It's kind of a mob mentality of numbers and 7 fits in well.

      A product priced as $247 would sell better in terms of volume, than a similar product at the price of $199 - aside from the fact that more pricey items are partnered with the belief that an item must be of high quality.

      With $247, you see 2 4 and 7, which are two low numbers and a middle ranged number at the end. We see that the majority of the numbers are low, thus we associate the cost of the item as being low. How we read from left to right does play a role in this.

      With $199, you see 1 9 and another 9. You see two high numbers, thus you associate this product as the cost being high.

      There is something called counter persuasion, and you notice this a lot with high priced goods, I'll write about that in a second. When you say "Hey, buy this thing, it's $1999" the buyer counter and says "No, thats $2000" - It's not that the buyer has become smarter about sales tactics, it's because they have just become more used to it. If someone says "Hey, buy this thing, it's $1977" they buyer isn't going to say "Hey, that's $2000" even though it is still close to the number of 2000.

      Check out these Armani suits. Notice the amount of 7's?
      Outerwear Emporio Armani on Emporio Armani Online Store United States

      A lot of people here use counter persuasion and don't really know it. When you say, "Hey, buy this for $199" the buyer says "Er, no, thats expensive" - you can then say "Hey, how about this, I will sell this to you for $177" - That is only a $22 difference, but to a buyer, there is no calculation - you've just greatly reduced the cost to a deal.

      Of course, there is an importance of "7" from a sellers point of view, you always want to get the most you can. When you have an item that costs $2, is it smarter to resell it for 9 or 7? 7, because the actual amount of sales you make by selling it for 7 will surpass the amount of money you lose by not selling for 9 while you steal earn close to 9.

      Consumers world wide are going through this phase where we are less interested by the number 9, and 7 is the new safe haven. Who knows what happened to 8 (actually, its a high number). This started in 2005... because of the internet.

      Zeros are funny, almost neutral numbers that don't really have a placement as they are both high and low. If you take an item and sell for 19.99 and you get an item and sell for 19.00 or even 20.00... 51% of people would choose 19.99, and 49% would choose either 19.00 or 20.00 - I think this is because we closely relate 9 to 0 now, and theres a bit of psychological normalcy bias towards 9, since we are so used to seeing it.
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  • Profile picture of the author paulie888
    The article provided by the OP seems to imply that Wal-Mart prefers using prices that use nines at the end, but I suppose that they've been doing a lot of testing with this lately.

    I've noticed that Wal-Mart (my local stores anyway) has been tweaking prices quite often, and changing the prices on items by small and almost unnoticeable amounts very few weeks or so. This seems to happen frequently especially with grocery items, which leads me to think that they may be testing various price points to determine which results in greater sales.
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  • Profile picture of the author Daryl Lim
    Wow, I wish I had Wal-Mart here in Singapore. It sounds like a good place for budget shopping and cutting down of expenses.
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  • Profile picture of the author greenhobo
    WOW..... I totally agree with this great info. I use these same techniques when i sell on my site. This is great.

    It makes sense though you feel like your saving money.
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  • Profile picture of the author frankfihn
    I actually prefer the Walmart random numbers over say $29.99. When we're negotiating real estate in real life, if I offer $65,000 to a seller it looks like I'm an investor trying to put together a deal. If I offer $64,752.31, I can say something like "well my partner's have crunched the numbers and this is the best we can do." It just seems more sophisticated than it really is and makes it seem as if you've gone the extra mile to give them the best possible offer.
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