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Solar energy company Solyndra shuts down

BY HBSDealer Staff

A Fremont, Calif.-based solar energy solutions provider that was once hailed as an example of the new green economy has closed and filed for bankruptcy protection, according to an article in the Silicon Valley Mercury News.

Around-the-clock efforts to keep the company solvent failed, according to the report. Solyndra received $535 million in Energy Department loan guarantees.  President Barack Obama visited the plant in May 2010.

The company’s sudden dismissal of its employees has brought threats of lawsuits.

Two other American solar power manufactures filed for bankruptcy last month: Evergreen Solar of Massachusetts and SpectraWatt of New York.

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Price tags ending in ‘.99’: Pros and cons

BY HBSDEALER Staff

Just-below pricing, or 99-cent endings, is a common marketing tool used to attract customers looking to get the best bang for their buck. But a Rutgers-Camden professor and pricing expert said that, in some cases, a penny saved doesn’t always translate into a penny earned for retailers.

“The difference between a good product and a poor product in the consumers’ eyes could come down to that penny,” says Robert Schindler, a professor of marketing at the Rutgers School of Business–Camden. “When consumers care more about product quality than price, just-below pricing has been found to actually hurt retail sales.”

Schindler, one of the world’s leading pricing scholars, is conducting a meta-analysis of the effect 99-cent price endings have on consumers. For years, he has studied the marketing strategy behind pricing an item at, say, $29.99 instead of $30. The penny may not seem like much, but people actually perceive a big difference in price and think they’re getting a bargain.

The illusion, Schindler said, isn’t the last number on the price tag. It’s the first number. 

“People focus more on the left-most digit,” said Schindler, who reviewed about 100 different studies in performing his meta-analysis. “Just-below pricing certainly makes it seem like the price is less than it actually is. It gives an image of being a bargain or a discount.”

Schindler said most people won’t perceive a big difference in price between a $20 item and a $25 item. But by dropping the price of each item by one cent, “something that costs $19.99 is considered much less expensive when compared with something priced $24.99.”

But while just-below pricing has been effective in increasing sales, Schindler has found that it can also work against retailers.

“On the other side, it can give the image that an item is of low or questionable quality,” he said.

Schindler said most people are more concerned about quality over price when buying luxury products, services or making risky purchases.

“Retailers don’t want those items to come across as cheap,” Schindler said. “For example, if you’re going to do some work on a person’s house, you wouldn’t want your price to reflect that you might do a poor job. In that case, the customer is concerned about quality, and I would suggest not using 99-cent endings. It’s better to be straightforward when selling that kind of product.”

Schindler was awarded the Lifetime Achievement Award in Pricing Research at the conference, which was held in New York. He teaches “Principles of Marketing,” “Pricing Strategies,” and “Consumer Analysis” at the Rutgers School of Business–Camden.  

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r.freund says:
Sep-11-2011 11:46 pm

interesting article with
interesting article with valid points. Odd pricing does have many advantages over the standard ninety nine cent ending. I witnessed the odd pricing scheme work quite effectively during the heyday of a certain "Big box" chain ( that shall remain nameless). At the time, the perception of the consumer was that they were getting some kind of good deal because the pricing did not end with ninety nice cents. In reality a $1.99 item was being sold for $2.17 and giving the stores a slightly higher margin. this perception can work nicely to a consumer that is wary of the being .99 cent too many times and can increase margins on "blind" items.

[email protected] says:
Sep-09-2011 03:19 pm

I tend to agree with the
I tend to agree with the article. I have usually tried to avoid ending prices in .99 & .95 because I believe the consumer will feel I have padded the price. By using .96, .94, or some other offbeat # I believe I am creating the impression that I have discounted to rock bottom- sometimes even increasing my price (& GP) above the dollar mark, say to .23. I also agree with the premise of the far left digit, which we see in gas prices. When approaching the X dollar mark, prices hover just under dollar for some time, then once they break through, prices jump rapidly.

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Durable snips added to Milwaukee hand tool line

BY HBSDealer Staff

Milwaukee Tool continues to expand its hand tool offering with the introduction of six new snips that are made with corrosion resistant metal to protect the tools from rust and deliver durability.

“Not only do the new snips provide best-in-class durability, they are also designed to uphold the highest level of ease of use and safety,” said Tim Albrecht, director of product marketing – hand tools for Milwaukee Tool Corp.

Backed by Milwaukee’s Limited Lifetime Warranty, each of the new tools is made with forged metal heads and machined precision for maximum tool strength and durability. Forged heads provide up to 10 times the life of comparable cast heads, the company claimed. Durable rubber grips add comfort and help protect the tool.

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