Pricing products and services can be stressful for businesses. Finding the perfect price requires balancing customer perceptions with profitability. Customers are influenced by various pricing cues like sale signs, prices ending in 9, signpost items priced below competitors, and pricing guarantees. Businesses should test which cues work best for their products and customers over time to maximize sales and loyalty while maintaining appropriate prices.

2. INTRODUCTION
Pricing your product or services may be one of the most
stressful parts of owning a business.
finding the right price to attach to a product or service is an
art.
Finding the perfect balance is important, but it’s also
about knowing how customers view prices,
especially prices that end in the number nine.

3. HOW GOOD ARE YOU?
Yogurt
35-mm Film
$1.99
$299.99
Combination TV-DVD Player
$8.99

4. WHAT’S THE POINT ???

Consume Have low Pricing
Awareness

Comparison Shop, don’t guess

Bad habits of relying on
retailers to tell us prices

5. TOOLS OF THE TRADE

Sale Signs

Prices ending in “9”

Signpost Items

Pricing Guarantees

6. SALE SIGNS
 Most
straightforward of the
pricing cues.
 Displayed near the discounted
item.
 Placing the sale sign cost the
retailers nothing
 Stores make no commitment
to a particular level of
discount when using the signs

7. FINDINGS
 Using
the word “sale” beside a price (without actually
varying the price) can increase the demand by 50%
 Retailers do not use such signs truthfully.
 Putting sale signs on more than 30% of the items
diminished the effectiveness of the cue.
 Placing sale signs on multiple items can increase demand
for those but reduce overall demand.
 Effective only when placed on few items.
 Misuse can result in prosecution.

8. PRICES THAT END IN 9

KNOWN AS Psychological
Pricing ,Charm Pricing is a Pricing
Strategy based on the theory that
certain prices have a psychological
impact.

Prices such as $1.99 is associated with
spending $1 rather than $2.

Makes items appear cheaper than they
really are.

Since people read from left to right,
they are more likely to register the first
number and make an immediate
conclusion as to whether the price is
reasonable or not .

9. EXPERIMENT:WOMEN’S CLOTHING
MIT and the University of Chicago conducted an experiment with
prices on women’s clothing.
-They had three basic prices, $34, $39, and $44.

FINDINGS
Surprisingly, the $39 item sold the best, even better than the cheaper
price of $34.

One reason is the mind sees the first set of numbers and registers it
as priced in the 30-dollar range, even when it’s closer to the 40-dollar
range.

Purchasing an item for $39.99 will seem more of a value than
purchasing the same item for $40 even.

Changing the price from $34 to $44 yielded no difference.

10. 
9 at the end of the price acts the same way as sale sign does

Buyers are more sensitive to price ending than price changes

Retailers reserve prices that end in 9 for discounted items.

Research suggests that prices ending in 9 are less effective when item
already has a sale sign.

11. SIGNPOST ITEMS
It is any marketing tactic used to persuade
customers that prices offer good value
compared to competitors’ prices, past prices or
future prices.
 Customers use the prices of signpost items to
form an overall impression of a store's prices
 This strategy is used by the retailers by pricing
the items lower than the usual price


12. ADVANTAGES OF SIGNPOST ITEMS
It
helps businesses
manage and nurture
relationships over time.
Use of signpost items is
best for small business

13. DISADVANTAGES OF SIGNPOST ITEMS
 Signpost
strategy can be used only
for the products for which price
knowledge is accurate
 Customers form impressions about
the store
 Creates perception that products
are underpriced

14. CUE, PLEASE
Right cue at right place is very important
Apply pricing Cues when customer is less
aware of product price and consider
employing cues when:
Purchase Infrequently
Customers are new
Design vary over time
Vary seasonally
Vary across stores

15. QUALITY HAS ITS OWN CUES
Make it "Right today, better tomorrow“

Balance efforts

Installment without
financial charges

Concern about Quality

16. PRICING MATCHING GUARANTEES
 Assure
the best price for the
items that carry exclusive
name, own price feature.
 Manufacturer or supplier pro
mises to refund the difference
in price

17. BENEFITS OF PRICE GUARANTEES
It is the easiest way to attract customers
 Pricing is directly related to the revenue
management department
 No fear of losing customers to rivals’ price
cuts


18. DISADVANTAGES OF PRICE GUARANTEES
 Price
matching guarantees are effective
when consumers have poor knowledge
 If
the guarantee is complicated,
customers recognizes that guarantee
lacks substance

19. TRACKING EFFECTIVENESS
•On
going measurement of cues are essential part
•Long
•As
term impact of the cues must be considered
per the study conducted :
•First time shoppers who saw deep discount on their
first purchase returned more often and purchased
more items when they came back and established
customers would stock up, returning less often and
purchasing fewer items.

20.  If
we overlook these long run effects it would set prices too
low for establish customers and too high for first time buyers
 Keep
other departments in mind as using additional sale signs
may increase demand within the department but harm
demand elsewhere.
 Retailer
should provide price information as they provide
product
 Focus
on quality as well

21. Harsh