It is broadly acknowledged that cultural influences extend to consumer behaviours; however, the specific impact of culture on pricing strategies has garnered less attention. Price endings are one aspect where cultural influence might manifest, evident in various forms such as round numbers (e.g., $10.00), just below a round number (e.g., £9.99), or precise amounts (e.g., €9.87). Despite the ubiquity of these pricing strategies, their prevalence in different markets and the underlying reasons for their adoption remain underexplored.

Recently, a team of researchers in Germany embarked on a study to understand if cultural dimensions—namely individualism, uncertainty avoidance, and long-term orientation—have a bearing on the prevalence of specific price endings. Dr Meikel Soliman, a researcher at Leuphana University Lüneburg and a co-author of the study published in Frontiers in Behavioral Economics, emphasised the potential for cultural factors to influence behavioural, cognitive, and emotional aspects and pricing strategies. Their research uncovered notable correlations between cultural dimensions and the choice of price endings.

The investigation drew upon a dataset comprising 9,200 price points collected from 23 countries to discern patterns aligned with cultural traits. The findings presented some unexpected results: higher levels of individualism correlated with a more significant occurrence of round pricing and a reduced preference for just-below pricing. Dr Soliman suggested that in cultures valuing individuality, such as those in Australia, Canada, and the Netherlands, retailers might avoid just-below pricing to avert any association with lower quality, thereby maintaining a high-quality brand image that appeals to consumers’ sense of individuality.

Conversely, cultures characterised by high uncertainty avoidance appeared to favour just-below pricing, which is typically associated with cost savings and perceived value. This preference could stem from a desire to mitigate the anxiety related to economic transactions by signalling lower prices and better deals. In these cultures, including countries like Greece, Portugal, and Belgium, round prices might not effectively convey quality or reliability, thus doing little to alleviate uncertainty.

Additionally, the study revealed that cultures with a long-term orientation tended to prefer round prices, which may convey trust and quality, aiding in establishing long-term customer relationships. This was observed in countries such as Estonia, Germany, and Spain, with a cultural inclination towards long-term planning and deferred gratification for future benefits.

These insights are particularly relevant in a globalised marketplace, where businesses often cater to a diverse clientele from various cultural backgrounds. Understanding the cultural underpinnings of pricing preferences can help companies tailor their strategies to meet culturally specific expectations and enhance market penetration. Although the study focused on a limited number of countries and one e-commerce platform, limiting its generalisability, the findings provide a valuable perspective on how cultural dimensions can influence pricing decisions.

The researchers acknowledged limitations in their approach, including the lack of a causal link between cultural dimensions and price endings and the absence of an exploration into the mechanisms underlying these relationships. Despite these limitations, the study offers critical insights into the complex interplay between culture and pricing strategies, highlighting the need for businesses to consider cultural nuances when establishing prices in a competitive global market.

In conclusion, Dr Soliman’s research sheds light on how cultural factors shape pricing strategies. It offers valuable guidance for retailers looking to adapt their pricing to meet the varied expectations of a culturally diverse customer base. This research not only enhances our understanding of the culture-price relationship but also underscores the importance of cultural considerations in the strategic decisions of global market participants.

More information: Meikel Soliman et al, Round, just-below, or precise prices? Cultural differences in the prevalence of price endings in E-commerce, Frontiers in Behavioral Economics. DOI: 10.3389/frbhe.2025.1296207

Journal information: Frontiers in Behavioral Economics Provided by Frontiers