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The Price Is NOT Right

We’ve talked a ton about pricing strategy in my 20+ years of writing this blog. Yet, I’m always surprised by weird pricing that just doesn’t work. Here’s the latest one from California Pizza Kitchen.

Yep, buy a glass of wine or even a bottle and it ends in $.49, $.59, or $.79. SO, how much is that glass of Rombauer chardonnay? It’s $13.59. What? How much is Runquist zin? It’s $9.79. Really? Yes! But why?

The research is clear that American consumers read left to right, meaning that they see the first digit before the last digits. And, that the first digit shades their view on the price.

For example, if one glass of is $9.99 and another one is $10.00, the $9.99 would be perceived as a better deal and likely to sell more.

Pricing strategy experts (me included!) would argue that there is no price perception difference between my Rombauer for $13.59 and $13.99. As a result, CPK theoretically loses $.40 in profit on every glass of wine every single day!

Why is this example relevant? Because if you are selling your consulting at $100/hour vs. $99/hour, you might be pricing yourself out of your market. If you only lower your price by $1.00, you might get new customers.

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