Odd prices or psychological pricing is the use of odd numbers (like .97) rather than even numbers (like 1.00). A spreadsheet analysis of both wholesale and retail prices shows the obvious: Wholesale prices, when looking at the last two digits, are distributed quite evenly over the range of 00 through 99. Retail 'odd' pricing results in nearly all prices ending with 09 through 99. In the case of one food retailer, there are no prices found other than ones ending with '9'.
To arrive at prices for the consumer, one could assume that they take their cost and apply some cost-plus calculation. If the calculation is applied to all items in a particular category, the resulting last digits of such end prices would follow a similar distribution as the wholesale prices they pay to obtain the goods.
a) The wholesale price is 0.34
b) The cost-plus formula arrives at 0.37 (food retailers typically work on a very small profit margin and rely on large quantities to arrive at net revenues which allow them to operate)
c) Yet there are no 0.37 prices advertised.
d) Is the 0.37 price rounded down 0.29 or is it rounded up to 0.39?
e) as stated in b) above, rounding down would most result in a negative revenue.
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