I agree with all your points. I immediately started thinking about the impact on businesses long-term and the amount of money that even $.01 equals when compiled over hundreds of thousands of transactions globally. The other aspect is the long-held psychology of the $0.99 pricing strategy. Interesting explanation from Christopher Burg (from Simon & Kucher a global consultancy firm that deals with commercial strategy & pricing consulting):
"Due to what is known as the left-digit effect, customers tend to round to the next lowest monetary unit. We see the left digit first, and so instinctively form an opinion on price before our rationale can catch up. A lower first number at the start of a price (e.g. $3.99 vs. $4.00) has a huge psychological impact, even though the price is more or less the same. Endings in 99 increase sales of low value items, with the customer focusing on the lower digit on the left."
It would be an interesting study to see how sales increase or decrease once the "99 factor" is removed. And in one decision, pennies will now become collectors items... especially the last minting batch. But haven't they always been kind of a collection item stuffed in big glass jugs and jars?
Better get our piggybanks over to the nearest Coinstar to turn those pennies in!
The Sankey chart was most interesting!
I agree with all your points. I immediately started thinking about the impact on businesses long-term and the amount of money that even $.01 equals when compiled over hundreds of thousands of transactions globally. The other aspect is the long-held psychology of the $0.99 pricing strategy. Interesting explanation from Christopher Burg (from Simon & Kucher a global consultancy firm that deals with commercial strategy & pricing consulting):
"Due to what is known as the left-digit effect, customers tend to round to the next lowest monetary unit. We see the left digit first, and so instinctively form an opinion on price before our rationale can catch up. A lower first number at the start of a price (e.g. $3.99 vs. $4.00) has a huge psychological impact, even though the price is more or less the same. Endings in 99 increase sales of low value items, with the customer focusing on the lower digit on the left."
https://www.simon-kucher.com/en/insights/why-prices-end-99-and-other-psychological-pricing-tactics
It would be an interesting study to see how sales increase or decrease once the "99 factor" is removed. And in one decision, pennies will now become collectors items... especially the last minting batch. But haven't they always been kind of a collection item stuffed in big glass jugs and jars?