Hospitality Managers’ Price-Ending Beliefs

Abstract

The use of “just-below” pricing (such as pricing an item at $6.99 or $6.95, rather than $7.00) has been common in some segments of the hospitality industry (such as quick-service and mid-scale dining). The results of a detailed survey of the price-ending beliefs of hospitality managers show that many believe that just-below prices connote good value and round-number prices connote high quality. Furthermore, the majority of these managers believe that consumers tend to drop off or otherwise give insufficient consideration to a price’s rightmost digits. Although one might expect this drop-off belief among those managers who use just-below price endings, it is found also in a majority of those managers who do not use just-below price endings. The survey results suggest that managers who decline the benefits of a consumer drop-off tendency do so because they also believe in one or more possible negative consequences of using just-below price endings. These include the beliefs that just-below endings (1) impair perceptions of high quality, (2) work against an upscale image, (3) give an impression of not being fully honest or straightforward, and (4) involve inconvenience in calculating or communicating the price or in making change.