What Your Prices Say — Weekly Retail Tidbits #272
“Price is what you pay; value is what you get.”
– Warren Buffett, who credits Ben Graham
Every price tag in your store sends a message. You might be thinking, “Wait a minute. You mean prices say more than what I am simply charging for an item?”
And the answer is, “Yes.”
When I had my retail business, I was a firm believer in ending prices in .95. What I noticed when people were shopping was that very few rounded up. If the price were 19.95, they’d say it was “19” – not “20.”
We want to buy (think dopamine rush), and if we tell ourselves the item costs a little less, we feel better about our decision to purchase.
Two things I loved about .95: beauty (lol) and the obvious – it’s almost another dollar. 9 and 5 were balanced in my mind. .99 seemed cheap, like it was screaming louder than .95.
It turns out there’s a name for what I saw at my register. Researchers call it the left-digit effect.* We read a price from left to right, and the first number does most of the talking. That’s why $2.99 can feel cheaper than $3.00, even though it’s only a penny less.
A price ending in 9 can even beat a lower price. In one well-known test, a clothing catalog offered the same dress at $34, $39 and $44. The $39 dress sold best.
But I changed my mind over the years.
I’ve realized people shop small businesses for lots of reasons, and one simple way we set ourselves apart is perception.
.00 is more luxurious. So are even numbers. “$” signs are not.
20.00 – no $ sign, .00 ending, even number
$11.99 – $ sign, .99 ending, odd number
If your customers have deep pockets, or just want to feel like they’re buying the best, use the 20.00 strategy. If your customers are looking for deals, $11.99 might be the strategy for you. You could use .95 and drop the “$” sign to raise the luxury feel a bit. And think about using all or part of the $11.99 strategy for markdowns.
When you figure out a retail price, I hope you think past one simple markup on every item. Some products can handle a little more margin, and some less. Find out what the company charges online. Find out what other stores charge. Think about the perceived worth. And – most commonly – know what you paid for it, including shipping.
I know you’re heading into the busiest time of the year, and most of your pricing is already done. Consider this a good reminder. As the season goes on and you start taking markdowns, it’s a helpful tip to keep in mind.
I am always here to help you figure out what is best for your business. Reach out any time!
xoxo,
❤️ AmyFay
Technology Tip
What Does Everyone Else Charge? Ask Your Camera.
Part of pricing well is knowing what the brand and other stores charge. Google Lens makes that a ten-second job: open the Google app on your phone, tap the camera icon in the search bar, point it at a product and tap the shutter button.
Scroll the results to see where it’s sold online and for how much. Try it before you set a new price and again when something sits too long. Knowing the going rate helps you price with confidence – and sometimes it shows you there’s room to charge a little more.
What the Headlines Mean for Your Store
Deloitte expects holiday retail sales to grow 4% to 4.8% this season, November through January. Their forecasters say shoppers across income levels are hunting for value – including switching brands and stores to find it. Value isn’t only about being cheapest, so it is a good time to check what your price tags are saying.
3 Tango Tidbits
Fresh for Fall
Faceplant – Sway Pant
Meet the new Sway Pant. Buttery-soft bamboo with a gently gathered waist, a relaxed wide leg and a split hem that sways when you walk – made for lounging or heading out. In Taupe, Black, Pink and Sage, sizes S to XL. Email me to order.
Whispering Willow – Body Butter
Stores count down to this one every year. Body Butter is back, in their top three scents: Lavender, Eucalyptus & Mint, and Lemongrass. It’s made with organic shea butter, organic coconut oil and organic beeswax, and it’s only available in the colder months because it doesn’t like the heat.
Cobblestone Living – Alessandra Wrap
Soft, light and made in Italy, the Alessandra drapes over the shoulders and flatters every shape – one size fits most. It’s a Cobblestone Living best-seller, and Beige is the color stores order most. Is it on your floor yet?
“Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for.”
– Peter Drucker
* Sources for the research above:
1. Thomas, M., & Morwitz, V. G. (2005). Penny wise and pound foolish: The left-digit effect in price cognition. Journal of Consumer Research, 32(1), 54-64.
2. Anderson, E. T., & Simester, D. I. (2003). Effects of $9 price endings on retail sales: Evidence from field experiments. Quantitative Marketing and Economics, 1(1), 93-110.
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AmyFay Chandler
AmyFay Chandler started out as a teacher, then spent 15 years as an independent retailer. Along the way she bought for multiple stores, dabbled in wholesale with two lines of her own, and found her way to repping. Today she is a sales rep for the brands she represents. That view from every side of the table shapes Weekly Retail Tidbits, which she writes from Knoxville, Tennessee, to help local retailers feel connected and maybe see something they do every day in a new light.
Also from AmyFay
Two of the brands I represent run their D2C side through me, with brick-and-mortar partners prioritized at every step:
- Sweet Tree Jewelry — school-spirit polymer-clay earrings
- Caroline B Cook — children’s books (the Virtue Series, Church Kitty)
Wholesale questions? [email protected]
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