Search US website

Minding Your Nines and Zeros

Author of The Simple Dollar, The Simple Dollar Recent Posts

1 Comment

August 8, 2009

Related Topics:

OPEN Forum Message

Test Your Business Skills

Take one or more of OPEN Forum's Crash Courses on topics like Leadership, Search Engine Marketing, Facebook and more.

Learn more

Featured Response

“Great article explaining something that many ...”

PAUL ROSENFELD

View all comments  

It's a trick that we've all seen dozens of times.  "It's a bargain for only $19.95!"  "The beef Burgundy is $20."  One pitch indicates value and the other indicates quality - and the number might be the biggest indicator of all.

Imagine a restaurant menu.  If you see prices like $7.99 and $9.99, you get the impression that the restaurant is actually a good value, a place where you won't be ripped off on the bill.  If you see prices like $10 and $12, you get the impression that the restaurant is putting out a value product and that you'll be getting something of quality.

When a customer comes in the door of your business, are they expecting quality or are they expecting value?  It's easy for a business owner to say "Both" and not really deal with the question, but knowing the answer to that question can make all the difference.

Instead, think of it this way: do you want to be known for providing good quality for the price, or would you prefer to be known as providing the best quality service in town, bar none?

If you want to present yourself as providing "bang for the buck" value, list your prices as being $29.99 or $39.99 or $9.99.  If you want to present yourself as having high quality, list your prices as being $30 or $40 or $10.

This becomes a cue in all aspects of your business.  The prices come with expectations.  If a customer perceives that a place is providing value, they're more likely to overlook minor details such as cleanliness of the store and presentation of the employees.  If you're using lots of zeroes in your prices, the customer will expect quality in other aspects as well.

Of course, if you go for quality, you can often make those round numbers a bit higher and get away with it - but your customers will be expecting quality in every aspect of your business.  You'll need employees with better customer skills and need to put extra effort into cleanliness and presentation.  If you go the other route, you'll be able to cut some corners, but your revenue won't be as high.  You can get away with the "dusty old shop" routine and an inexperienced person behind the counter, but your revenue won't be as high, either.

Minding your nines and zeros is surprisingly essential to the nature of your business.  Choose them carefully, and remember what they mean.

What do you think?

Member avatar

Change social network

Join the conversation ( 1 )

  • PAUL ROSENFELD 2 years 9 months and 15 days ago

    PAUL ROSENFELD

    Great article explaining something that many small business owners may intuitively know but you really clarify it. I'd also add that using off numbers can help set your pricing apart from competitors and also draw attention to them vis a vis other aspects of your business. For instance, Wal-Mart very successfully uses $.97." Effective pricing strategy is a whole area unto itself. It would be great if you could write a post exploring bundling, discounting, and other basics of pricing strategy. Paul @fanminder.com

Crash Courses

Earn 76+ IQ Points

Tax Deductions for Your Business

Do you know what’s deductible for travel and entertainment? What about payroll and legal? Or net operating losses? Tax expert Barbara Weltman explains all this and more.

Launch course

Javascript is currently disabled. Please enable javascript for the optimal OPEN Forum experience.

All users of our online services subject to Privacy Statement and agree to be bound by Terms of Service. Please read.

© 2012 American Express Company. All rights reserved.