Maximizing your profits with odd-even pricing
Let’s say you were shopping for a hair remover tool for dogs and saw two similar products priced at $29.99 and $30, respectively. Which would you buy?
Research says you’d go with the former because $29.99 looks like a great deal compared to the $30 product. But does one cent really make that much of a difference?
No. But this is why odd-even pricing is considered one of the most effective product pricing strategies. By tweaking some of your prices and leveraging odd-even pricing, you might be able to drive even more sales this year. In this blog, we’ll share what odd-even pricing is and how it works.
Understanding odd-even pricing
Odd-even pricing refers to a pricing strategy where the price either ends in an even or odd numeral. It's similar to charm pricing (a.k.a. psychological pricing), which aims to spark certain emotions to influence a purchase.
Price endings are known to affect customer behavior in different ways, and choosing the right pricing strategy for your niche has the power to improve sales by making your customers feel that they’re getting good value.
Instead of pricing your products in round numbers (e.g., $30), odd-even pricing usually involves discounting prices by a few cents to persuade customers to hit 'buy.'
How does odd-even pricing work?
Here’s a quick breakdown of the two types of pricing that we’re looking at.
Under an odd pricing approach, a product’s price will end with an odd number. For example, Le Fluffy Dog sells this dog sweater for $34.99. Note: your price doesn’t always have to end in a nine—retailers often use seven or five depending on their pricing schedules and the level of discount.
Even pricing is the opposite of odd pricing, where the final digit ends in an even number. These prices are usually rounded up or end in a zero. For instance, HGBB Studio offers this men’s zip-up sweater for €135.00.
Although these two strategies are often associated with different types of businesses and serve different purposes, they can work together pretty well. For example, some companies use a combination of these strategies to set their high-end products apart from lower-priced or discounted items.
This approach can also be useful for brands with a broad range of products that want to appeal to customers with different interests and budgets. So, don't be afraid to get creative and mix things up as you test what works best for different audiences.
To get the most out of this pricing strategy, it's important to understand why it works so you know how to best approach implementing it.
The psychology behind odd-even pricing
Like many great things in life, this pricing strategy came about by chance. Vendors in the 1900s needed a way to record a sale, and the best way to do so was to charge less than a round number to force cashiers to open the register to retrieve change. (If vendors charged round numbers, there was a real concern that cashiers would pocket the cash because they didn’t need to open—and thereby record—the sale.)
Since then, studies revealed that odd-even pricing plays a strong role in influencing customer behavior.
According to image theory, we automatically associate prices that end in a nine with discounts or sales. So when we see an odd price like $3.99, our brain perceives it as being a better deal than something that costs exactly $4.00.
On the other hand, with even prices like $2.00 or $6.00 we're less likely to be tricked into thinking we're not getting a good deal because our brains don't have anything to round up or down to.
One theory suggests that our brains tend to ignore zeros in prices, leading us to pay less attention to products that are priced in whole numbers. Customers are therefore more likely to balk at even prices and feel that they could get a better deal somewhere else.
Research further indicates that odd pricing is often associated with low-value products, while rounded up prices are associated with high-quality products.
How to implement odd-even pricing effectively: 4 essential tips
Odd-even pricing can be a great way to increase profits and create an attractive offer for customers. To implement it responsibility, take the following tips into consideration.
01. Consider your target audience and market
Different audiences may have different levels of willingness to pay for items, so it's important to consider who your customers are and how they would react to a price decrease before implementing odd-even pricing. A couple of questions you can address to help you understand how your customers would react to price changes:
Are your customers more likely to be bargain shoppers or, conversely, willing to pay a bit more for quality?
Are they looking for convenience or value?
Because markets are constantly changing and evolving, you should regularly review your customer profiles and market conditions to ensure that your pricing strategy aligns with your customers’ needs.
02. Analyze your competitor pricing strategies
One of the best sources for checking the market range for product prices are your competitors. You might find that a majority of your customers choose to use odd pricing, in which case you may choose to follow suit to remain competitive in your customers’ eyes. Alternatively, you may find that a majority of your customers use even pricing, in which case going against the trend may give you a competitive edge.
Remember to consider any discount pricing strategies that competitors might be offering and how that affects the numeral at the end of the price. For example, some retailers may end final clearance items with a particular odd or even digit to signify that it won’t be discounted any further.
03. Balance odd-even pricing with product and brand image
Retail pricing can be a tough balancing act when it comes to your product and brand image. On one hand, customers may expect low prices, so odd-even pricing could help to attract new customers. On the other hand, if you’re selling premium products, you may want to convey an image of exclusivity and high quality through your pricing strategy.
It’s not uncommon for luxury retailers to charge high even number prices, like Gucci does for virtually all of the items listed on its site.
04. Test and adjust odd-even pricing strategies over time
Experiment with different price points and see how customers respond, just as you would with A/B split testing in email marketing. Track the impact on sales and customer sentiment, and adjust your pricing accordingly.
Keep in mind that testing prices might not sit well with customers who’ve bought items at a higher price previously. To avoid upsetting your customers, limit your experiments to new or out-of-season products. Or, if you’re going to mark down your prices, announce that you’re having a limited-time sale.
It goes without saying that it’s best to test the waters with a few products first before restructuring your entire pricing schedule.
Examples of odd-even pricing
Retailers in different industries leverage odd-even pricing in different ways. To help you get started, here are some examples to check out.
The Korean mobile phone manufacturer is credited with creating one of the first high-end smartphones that offers all the desired bells and whistles. Samsung takes an interesting pricing approach with their Galaxy S23 smartphone. While the phone would normally cost $799.99, Samsung’s promotional offer changes the final price to an even number, challenging conventional thinking and showing customers that they’re getting a great deal (i.e., saving nearly $100) when the price is lowered to $700.00.
Highline Wigs sells wigs to support women who experience hair loss. Given how the company only uses human hair to make its products, the wigs are often regarded as high-quality, high-ticket items. As such, Highline Wigs uses all even pricing, conveying the premium quality of each product.
Given that Walmart serves a wide range of customers, their pricing strategies vary depending on the type of product. For example, the below sofa features an even starting price and remains that way, even after a $135 discount is applied—maintaining the perception that it’s a relatively superior product in Walmart’s catalog.
But when it comes to everyday household items that cost less than $30, Walmart’s pricing strategy varies between odd and even pricing. That said, the majority of discounts seem to lean towards even pricing without ending in a zero. The purpose may be to price-match competitors or to undercut the market price by shaving off several cents.
Choose the right odds and ends for higher sales
Odd-even pricing can be a great way to increase profits depending on your industry. If you sell high-end products or services, this could be the chance to test higher prices or offer alternative discounts for an increased conversion rate.
But above all, remember that no matter which pricing strategy you choose, the key is to understand how your customers perceive each type of pricing—and to find the price format that best suits their needs.
Once you find the sweet spot, your business might experience a breakthrough against the odds.
Allison is the editor-in-chief at Wix, with several years of experience reporting on eCommerce news, strategies, and founder stories.