What does a community college drop out know about pricing strategy? Well Dave Gold apparently knew more than you’d expect. Gold inherited his father’s liquor store in the early 1960’s after he passed away. Not knowing much of the business, Gold decided to experiment and started in the most obvious way: pricing.
They had previously sold wine at various prices, ranging from 70 cents to upwards of a dollar, but they had noticed that 99 cents generally worked better. He decided to run a simple test for wine, setting a fixed price point of 99 cents. It was an instant success and he quickly recognized the power of 9.
“Whenever I’d put wine or cheese on sale for $1.02 or 98 cents, it never sold out… When I put a 99 cent sign on anything, it was gone in no time. I realized it was a magic number.”
Dave Gold in a 2001 interview with The Los Angeles Times
Building on this idea, he figured he could be hugely successful applying the same premise to all sorts of items, which ultimately led him to opening the first of hundreds of 99 Cents Only stores in the United States.
The Left Digit Effect
The power of 99 cents and more specifically 9, has been around for decades. From 99 cent songs to 99 cent stores, the power of this pricing strategy is still…
