How Odd-Even Pricing Influences Your Customers

Ever noticed how Tesco prices items at £1.99 instead of £2? Or how Harrods displays that designer handbag at exactly £1,500 rather than £1,499? This isn't random; it's a psychological pricing strategy called odd-even pricing, and it could significantly impact your business's bottom line.

What Is Odd-Even Pricing?

Odd-even pricing is a fascinating psychological strategy that plays on how customers perceive prices ending in odd numbers versus even numbers. While there's virtually no financial difference between £9.99 and £10, research shows that this single penny can dramatically affect consumer behaviour.

Prices ending in odd numbers (particularly 9 and 5) tend to suggest value, discounts, or bargains. Meanwhile, even-numbered prices - especially those ending in zero - tend to communicate premium quality and luxury. Fascinating, isn’t it? 

A Bit of History

The origins of odd-number pricing aren't clear, although one interesting theory suggests it began as an anti-theft measure. When items were priced at whole pound amounts, cashiers could pocket cash without opening the till. By pricing items at £2.99, the cashier would need to open the register to provide change, thereby creating a record of the transaction.

As retail psychology evolved, businesses began to recognise that these seemingly insignificant price differences had measurable impacts on consumer perception and purchasing decisions.

The Psychology Behind the Pennies

The last digits in a price can shape customer thinking as much as - and sometimes more than - the first digits. This is often referred to as charm pricing, making certain price points appear lower than they are.

Odd-Priced Items Signal Savings

When you see £7.99 at Primark or £124.95 at Currys, your brain processes these prices as meaningfully lower than £8 or £125, even though the difference is negligible. Budget-conscious retailers like Poundland, despite their name, often use odd pricing to enhance the perception of value.

Even-Priced Items Convey Elegance

When Liberty or Selfridges price an item at £200 rather than £199, they're making a statement about quality. Even-numbered prices, particularly those ending in zero, communicate completeness and premium positioning. Think about it – have you ever seen a Savile Row tailor advertising bespoke suits at £1,999.99?

UK Businesses Using Odd-Even Pricing

Let's look at how British businesses implement this strategy:

Supermarkets Master Odd Pricing

Sainsbury's and ASDA rarely price items at round pounds. That bottle of wine is £7.99, not £8, and promotional items nearly always end in .99p or .49p. Even when they run sales, items typically drop to £4.99 rather than £5.

Petrol Stations Go the Extra Decimal

BP and Shell don't stop at .9 – they go to .9p per litre. That's why you see prices like 149.9p rather than 150p per litre.

Luxury Retailers Embrace Even Numbers

Burberry doesn't price coats at £1,499; they're £1,500. Fortnum & Mason rarely uses .99 pricing on their premium hampers - you'll see £250, not £249.99.

Service Providers Keep It Even

Most solicitors, private tutors, and consultants across the UK quote hourly or project rates in even numbers, which typically end in zero. It's £150 per hour for legal advice, not £149.99.

How to Apply This to Your Business

The key is aligning your pricing strategy with your brand positioning:

• If you're competing on value, consider odd-numbered pricing ending in 9 or 5.

• If you're selling premium products or services, consider whole pound amounts, particularly those ending in zero.

• Test different price points with your specific audience, sometimes small tweaks can yield surprising results.

Remember, though, your pricing strategy should be consistent with your overall brand message. If you position yourself as a premium service but use .99 pricing everywhere, you're sending mixed signals that could confuse potential customers.

Once you start noticing odd-even pricing, you'll see it everywhere!