Everyone expects the local filling station to price their wares to the tenth of a cent. When’s the last time you bought gas for something other than a whole number plus 9/10ths? I don’t know that I’ve ever had the chance. Until now, however, this pricing strategy has been taboo in the rest of the retail trade. Those days are apparently over.
The LA Times reports that a discount retailer, 99 Cents Only, is raising prices…to 99.99 cents. Now you’ll actually have to buy 100 bottles of Del Monte Ketchup to experience a true “under a buck” sensation. I think that going to the full 99/100th’s is over the top, but why not start pricing at the 9/10ths of a cent point? I’ll bet the modern computerized register is capable of handling this task. If it’s really true that people instinctively round down to the whole number – that they think that gas costing 3.49 9/10 is really 3.49 – that leaves a lot of room for price increases that will have virtually no impact on demand.
Obviously, it’s not going to make a huge difference if Costco reprices its Mother Casket to $924.99 9/10. But at the low end of the market – those products that routinely cost 25 cents or less (can you spell Top Ramen??) – a near-penny spike that that has nil impact on demand must be very tempting.