The secret of pricing things

[Marc1]

I am afraid that the microbiologic reason for the milk to be in the back of the store is ... how to say it without offending ... incongruous? 

Milk is ... in western society, an essential item like bread. If you retail food you must have it. And for that precise reason the profit from selling milk is almost non existing. You would have rocks in your head if you place milk fridge at the front of the store. 

Placing it at the back has two purposes. You use a lesser valuable space and force customers to walk through the store with the obvious advantage of displaying the rest of the merchandise that produces a larger profit than milk or bread.

As for the milk having to be rushed between truck and fridge ... there is such thing as specific heat capacity, and the milk is pretty high. It will withstand the trip from truck to fridge anywhere in the store, including a trip in the lift if applicable. 

Now ... what happened to the question of the 19.99 price? 

Oh yes ... Das, if you sell for $19, $19.90 or $19.99, the public will not notice any difference most of the time. If you sell for $20, it is that bit dearer. You will have to determine if it is enough to deter from the purchase or not. Stocking a bit of change is after all not a big deal, just a trip to the bank once in a while. 

Sorry SLAG, bacteria are not that fast

[SLAG]

Marc1,

With favorable conditions E. coli bacteria double every twenty minutes.

You make several assertions. Please supply scientific references for those claims. I will be happy to read them.

SLAG.

[BIGGUNDOCTOR]

I'll hit two points here.

As to pricing, if you do a whole dollar amount and add a note tax included it helps. I know some who do his and it eliminates coins to deal with.  But there is the adage of under $20 and looks good in a doublewide that does fit for many craft shows.  It kind of plays along with the gun raffles my grassroots NRA group did. When we had a high end firearm ($1,000+) we tried $10 tickets and a maximum of 300 tickets sold, as opposed to the $1 each, 6 for $5 format. We never sold out of the $10 tickets-maybe 250 to 280 would be sold. On the other format we would sell $3,200 worth of tickets on average for a firearm in the $200 range. Much better odds with the $10 ticket, but it was hard getting someone to part with a $10 as opposed to a buck's worth of change everyone seemed to have with them. It all gets down to perceived value by the customer. I do it all the time. I will cheap out on items like socks, but toss a ton of money at something like a project car, or a yard sale gamble,  that others would run from. 

As to the milk. The trip through the store is shorter and more temp controlled than the lazy walk through the store the shopper makes before loading it into the car for the miles drive home. And if it is summer here in Las Vegas, car interior temps can hit 160F+. My drive home can take an hour plus, so I will take a cooler if I know I am getting something like that, but I have also stuffed as much as I could into my soft side lunch tote (a gallon milk jug won't allow the zipper to close, but 2/3 is covered) for the trip home. Being a bachelor I have pushed expiration dates to the maximum. I call it my zombie apocalypse training   BTW, buttermilk will go a year in the fridge, 18 months is too far along.

[Marc1]

5 hours ago, SLAG said:

Marc1,

With favorable conditions E. coli bacteria double every twenty minutes.

You make several assertions. Please supply scientific references for those claims. I will be happy to read them.

SLAG.

Now you are clutching at straws

Milk comes in a refrigerated truck and in crates or boxes with a minimum of 15 Kg of milk at 5 C in each crate.

Milk specific heat capacity is 3.8 J/g/C for full cream milk. You will need to apply 57 Kj to the milk crate to take the milk to 6 C, not counting the resistance heat encounters to travel through packaging and crate.  350 KJ to elevate the temperature to something meaningful like 12C. Doable with a large garden blower and a heat source blowing for some 20 minutes perhaps. 

The milk is in plastic bottles and the crates are piled up all together and that makes the mass even larger. The idea that a trip from the truck to the shop and a wander through the shop front or rear or anywhere,  in mostly air conditioned air is likely to rise the temperature of the milk to a level that allows lactobacillus acidophilus to reproduce, that is 12C or more, is as likely as it is to win the lottery without purchasing a ticket.  (As for E. Coli in the milk ... mm ... I would change suppliers )

Milk is pasteurised and 99.99% of bacteria is stone dead. Yes, some thermoduric survive but it takes a lot to wake them up.

Milk can stay unrefrigerated for two hours, one hour if the ambient is more than 30C. A few minutes more or less to a large mass of cold milk is uneventful. 

Now what price can we suggest for those Das trinkets? 

[SLAG]

Marc1,

I cannot argue with your cascade of facts.

I am over whelmed.

Touche.

SLAG.

[Marc1]

Ha ha ... you are too funny 

[CrazyGoatLady]

Thomas, the partridge in a petri was priceless. Thanks for the chuckle.

I look through places like etsy to see what people charge for certain things. The prices can range widely, but seem to be about the same for what looks to be about the same quality work. Higher quality work goes for a good bit more. Das was asking about the psychology or perception if you will. I wonder if people stump themselves in their pricing? That is to say, if I see someone who is charging significantly less for something than others are, I wonder if he or she is not as confident in their work? Or do they figure if they charge less, they will get more sales? I admit when I see that, I find myself looking towards the more expensive, but same item. Maybe it's the subconscious trying to tell me, if it's more expensive, it must be better. Although I don't think that normally. Or consciously anyway. As I mentioned before, I haven't sold anything, but I'd like to at least be able to cover my fuel and a little extra wouldn't hurt. But this is one reason why is bcause I'd have no real idea what to charge. I'm one of those who isn't real confident in my work. I think, who would want to buy that? Just thinking out loud I guess. 

[ThomasPowers]

I remember one Festival of the Cranes I was at where I did almost all my selling during set up and tear down times. That meant that other crafters and artists thought my work was good value for the price but the regular patrons did not seem to think so.  Very odd; but luckily I don't do this for a living.

[anvil]

How I bid my jobs reflects the $19.95 vs $20.00 psychology with a twist. I do this with my commissions, but had not thought of it when I did crafts fairs.

I charge time + material, not to exceed x dollars. Then when I submit my bill, I always come in under that x amount

The psychology is that it is the rare person that will actually come in under his/her bid and pass it on to his client.  Often times the client will remember this and talk of it to others far more than the actual product!

[rockstar.esq]

Reading through all of this reminds me of business and psychology classes where a couple of "major studies" are cited as the gospel of how things must be done.  Even if history shows that they're not very good ideas.

Take the grocery store for example.  Piggly Wiggly upended the traditional norms by setting up the store to allow customers to gather their own purchases.  Prior to that, everybody had to wait for the shop keep to gather your order one item at a time, one customer at a time.  Psychologically speaking, traditionalists could argue that the old way was "better" because there was more personal customer service.  This of course assumed that everybody loved spending social time with their clerks.  Financially speaking, this inefficient mode of commerce ultimately meant that the store had to charge their customers more to cover the overhead.  

One of my first jobs was a "bagger" at a local supermarket.  Most people paid with cash or check.  It took forever, so they built seventy lanes and staffed each one with a cashier and bagger.  Credit cards existed, but most people didn't use them for groceries.  Electronic Bank Cards came along, and within months, it was only "old people" who were holding up the line to write checks.  Within 6 months, the handwritten check was getting processed as an electronic bank transaction.  By 1 year in, the store only staffed half the checkout lanes because we had no trouble keeping up despite the increased customer traffic.

Now, it's getting to where there are as many self-checkout lanes as there are cashier lanes.  The selfsame grocery run that used to consume three hours of my day, is now done in a half-hour.

When these grocery stores put their remodel projects out to bid, there's always a significant shift being made in the refrigerated cases.  As an electrical contractor, I'm keenly aware that the store has limited resources and patience for the transfers from old cases to new.  The milk is never their primary concern.  The frozen treats like popsicles, ice cream, and deserts are.  We were told that the frozen treat section, just one product deep is worth a quarter million dollars.  Everything melts from the door side first, and it only has to lose the "temper" of the candy coatings for it to be scrapped.

Take a look at your average grocery store and ask yourself how many of them have frozen food sections next to the checkout?  I see them getting moved further and further away.  Ever notice how there are handy mylar bags for sale?  These stores spend an absolute fortune on remodeling.  Everything is based on what drives sales.  They can (and sometimes do) put a frozen goods "boat" right next to the checkout. The store doesn't stock shelves themselves, that's the vendor's problem.  They could put the milk wherever they wanted without compromising food safety.  Honestly, I think the main logistical reason for milk coolers on the back wall is because they're frequently stocked from the rear where a ruptured jug is more likely to leak into the milk cooler's floor drain.  A gallon of liquid covers a whole lot of square footage on the sales floor.  Slip and fall settlements aren't cheap.

As for the original question about the psychology of rounding the price.  I think we live in a different age.  Many stores offer applications where you can use your phone to "scan" the UPC codes as you put items in your cart.  Old timers would say it's rude to impose on your customers.  Here's the thing, pricing isn't transparent.  Taxes are seldom if ever included in prices posted in the U.S.   Then there are items that are sold by weight leave a lot of uncertainty, especially since the available scales are seldom inspected or calibrated.

For a person trying their level best to stick to a budget, it's a small miracle to be able to see the running tab on your phone.  The stores using theses systems universally label weighed goods like produce.   Speaking of sales psychology, how come nobody ever considered shame?   If the total gets too high, there's significantly less stigma in putting something back on the shelf while shopping compared to asking the cashier to remove it from your order while other shoppers look on.  That "personal touch" isn't always positive.

For all the bookish arguments about psychology and trend data to support annoying marketing techniques, there's a lot to be said for being sensitive to what doesn't actually work well for people. 

Speaking for myself, I virtually never have cash, even at an art show.  If people can't/won't take a bank card, I don't make the purchase.  That being said, most ATM's will dispense in $20 bills.  ATM's are the only thing that matters to me because banks have been consistently closed whenever I've needed them, for most of my working life.  

On the incredibly rare occasion that I do use an ATM to make a cash purchase at a show, I'd much rather make a purchase that lands on an even dollar.  So I guess I'd say that if your goal is cash sales, figure out everything, taxes included, and adjust to an even dollar.  Most fairs are too loud for easy conversation so when I ask how much, it's far easier to hear "twenty bucks", than "nineteen dollars and ninety-five cents".  Anything I could easily find online needs to be better or cheaper than online, so using Etsy to set your prices is a non-starter for me.  Plus there's a huge difference between "asking price" and "selling price".