Broken price
When broken prices (also threshold prices ) is called prices that are just below a round figure such. B. EUR 0.99 instead of EUR 1, CHF 1.95 instead of CHF 2, US $ 39.50 instead of US $ 40.
Broken prices are widespread in German retail . Many prices are 1 cent, 2 cents or 5 cents below a threshold (e.g. 0.99; 9.98; 4.95). A purchase price of z. B. 1000 euros often goes to 999, -; 998, - or 990, - "rounded".
There are also threshold prices for online auctions , for fuel prices (e.g. 120.9 cents per liter) or for so-called reverse pricing .
origin
The reason given is the - albeit controversial - psychological effect. A broken price should appear disproportionately smaller, even if the difference is only one cent, such as € 19.99 instead of € 20.
Another reason is that fractional prices emerged in the US in the early 20th century to prevent employee theft. Broken prices forced the seller to go to the checkout with the customer's money to get the change instead of pocketing it.
Another anecdote can be found in Scot Morris' Book of Strange Facts & Useless Information from 1979: In 1876, Melville E. Stone in Chicago convinced shopkeepers that impulse purchases would increase their sales when prices were below a threshold price. His motivation was to increase the circulation of the relatively rare pennies so that he could sell his newspaper (for the price of one cent) better.
The same source also claims that price competition, particularly in advertisements in newspapers and magazines from the 1880s, was the cause. For the first time, customers had the opportunity to compare prices directly and sellers tried to undercut each other.
literature
- Reto U. Schneider : Das Experiment 1.95 Fr., 9.95 Fr., 19.95 Fr. in NZZ Folio , Die Zeitschrift der Neue Zürcher Zeitung, August 2007, p. 67
- Wray Herbert: Why Things Cost $ 19.95 in Scientific American, April 2008