Success for 99 Cents
How do you sell things in a time when the economy is down and people just don’t want to buy?
Try the 99 cent approach. Steve Jobs, boss of Apple Computers tried it and probably saved the music industry. He chose a standard price of 99 cents for each song that he wanted to sell on iTunes and built a successful music download company. Before iTunes started in 2003 hardly anyone thought about paying for music if they could steal it from internet networks.
In the 1960s Dave Gold and his wife owned a store that sold alcoholic drinks in southern California. They sold wine in three price categories: $0.79, $0.99 and $1.49. When he saw that the 99 cent wine did best he started selling the other two at the same price and sales went up. In 1982 the couple started several 99 cent stores across the US. Today the company is worth almost 500 million dollars and has 280 shops.
Although Gold wasn’t the first to come up with the idea he may have been the most successful. In 1880 the first 99 cent ad appeared in a newspaper.
Why does a 99 cent price tag have so much success? Maybe a price ending with a 9 means that you get, at least, a little money back. Researchers have found out that prices ending with .99 shows a lower price for consumers.
When a grocery store lowered the price of margarine from $ .89 to $ .71 the sales went up by 65% but when the same margarine was further reduced to $.69 sales rose by an unbelievable 222 %.
So when shopkeepers put price tags on their products with numbers ending in a 9 the reason is simple: it looks less and you get something back.
- approach = method
- consumer = a person who buys things
- further reduced = to go down again
- grocery store = a shop that sells food
- price tag = a piece of paper that has a price on it
- researcher = a person who does work on a subject and tries to earn something about it
- sales = the selling of a product
- store = shop