Supermarket Prices: How irregular prices influence customers | Aisle Files

My parents owned a small corner store in the ’90s, and back then there were still only cash and coins. So we priced our items at rounded numbers, to make giving change easier.

I didn’t realise how easy I had it until I began working in a large supermarket during my high school years, where items were priced at $1.99 or $2.98 or $3.96!

You had to have 1 and 2 cent coins at the ready.

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Once these coins were phased out in 1992, everything would then needed to be rounded down or up, depending on the cost.

That $1.99 item became $2 at the checkout, and the $3.96 item was suddenly $3.95.

It was a crazy time, during which I made sure to carry my coin purse everywhere I went just in case.

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Then the digital age kicked in with a frenzy, going well beyond credit cards and onto debit cards and then smart phone payments.

Those $1.99 and $2.98 and $3.96 items could remain at those prices because these days we simply tap and the exact amount comes out of our accounts – digitally, magically!

I can’t remember the last time I carried coins around, aside from the $2 coin I keep in my handbag for trolley access at supermarkets.

Still, I find it irritating when I see these irregular prices on price tags.

I think it’s due to my past struggles to give people change when they were purchasing them, or the rounding up and rounding down days that did my head in.

Or maybe it’s because deep down, I know I am being manipulated.

That’s one of the problems with being a Consumer Reporter. You know all the tricks, so you get pretty cranky when all those strategies work!

I know that $12.99 item is really $13, and my brain thinks it is cheaper at $12.99 than at $13, but why?

Thinkerbell founder and consumer expert Adam Ferrier took the time to explain this phenomena for 9honey Money.

I sent him a bunch of photos of irregular prices I found at my local supermarket and asked him why retailers did this, and what impact it had on consumer behaviour.

He began by saying there’s “loads going on” before unpacking it for us.

“The most distinctive thing going on here is the ‘left digit’ effect,” he said.

“This is a cognitive bias where people pay more attention to the left-most digit of a number when evaluating its value, especially with prices.

“This happens because we read numbers from left to right, and we anchor on the first digit we read.”

So that means the $12 is anchored in our brains, not so much the closer-to-$13 that we are actually paying.

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“Also we tend to put information in buckets,” Ferrier continued.

“Our mental categorisation puts $4.99 in a different ‘bucket’ than $5.00, and that affects perceptions.

How supermarkets have changed over the years

“So retail pricing, menus design and even salary expectations can all be impacted by this left digit effect.

“Next time ask for $89,000 per annum, it’ll feel a lot less to your employer than $90,000!

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“There are many other heuristics and biases used in pricing.”

So when you are doing the shopping this weekend and you see this sort of pricing, take a deep breath, and remember, it’s not personal. It’s business.

As as long as you are paying the lowest price possible, having ideally done some research before hand, then there’s no harm, no foul.

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