Odd-Even Pricing

Odd-even pricing is when a price is set a few cents or sometimes dollars before an even price such as $19.99 instead of $20. This strategy is said to be effective because our minds perceive it to be cheaper than $20 dollars even though it barely is. A&W is one food chain competitor that does not use odd-even pricing. I think this is a good strategy because when customers are paying with cash, it may seem annoying to have an odd-even priced item which may result in customers not purchasing the item. Palmquist states in his article that 57% of consumers prefer round numbers and this large percentage is too high to simply ignore.Companies need to satisfy customers and make them happy or they have a risk of losing them so switching to round numbers instead of odd even pricing could increase sales.



Reference:
Palmquist, M. (2013) Strategy and Business: https://www.strategy-business.com/blog/The-Psychology-of-Pricing-Customers-Prefer-Round-Numbers?gko=f4877