Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/202541
Authors: 
Snir, Avichai
Levy, Daniel C.
Year of Publication: 
2019
Series/Report no.: 
Working Paper No. 2019-06
Abstract: 
9-ending prices are a dominant feature of many retail settings, which according to the existing literature, is because consumers perceive them as being relatively low. Are 9-ending prices really lower than comparable non 9-ending prices? Surprisingly, the empirical evidence on this question is scarce. We use 8 years of weekly scanner price data with over 98 million price observations to document four findings. First, at the category level, 9-ending prices are usually higher, on average, than non 9-ending prices. Second, at the product level, in most cases, 9-ending prices are, on average, higher than prices with other endings. Third, sale prices are more likely to be non-9 ending than the corresponding regular prices. Fourth, among sale prices, 9-ending prices are often lower, on average, than comparable non 9-ending prices. The first three findings imply that although consumers may associate 9-ending prices with low prices, the data indicates otherwise. The fourth finding offers a possible explanation for this misperception. Retailers may be using 9-ending prices to draw consumers' attention to particularly large price cuts during sales, which perhaps conditions the shoppers to associate 9-ending prices with low prices.
Subjects: 
Behavioral Pricing
Psychological Prices
Price Perception
Image Effect
9-Ending Prices
Price Points
Regular Prices
Sale Prices
JEL: 
M30
M31
L11
L16
L81
D12
D22
D40
D90
D91
E31
Document Type: 
Working Paper

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