Let's see now; two times 99 is, um, eight, carry the one...

You've probably seen signs like this at car dealerships all over the place:

Looks like a bargain, doesn't it?

Only ninety-nine bucks!

No wait - the (relatively) fine print points out that this is every TWO WEEKS, not every month.

And it isn't really two times 99; it's 2.17 times 99 (52 weeks in the year, divided by 12, divided by two...).

I guess this is all part of marketing.

Vendors have almost always expressed prices with a few cents chopped off the next highest dollar.

And, at any price level: $4.99 has always seemed like a lot less than $5.00.

Only a few pennies different, but it seems like more than that, and customers seem to react favourably to this tactic.

Psychologists probably get Ph.Ds studying consumer behaviour like this.

One semi-common exception is high-end restaurants; perhaps there it would seem crass to think you'd be dissuaded from trying Chef Antoine's latest creation by a price that was lower by just a few cents.

Besides, with the penny now officially abolished in Canada...

There may be another marketing gambit going on here. I think people with real jobs (as opposed to freelance automotive journalists...) get paid every two weeks; a bi-weekly hit for your car might make it easier to budget.

Understand though that if you are paid monthly, depending on which day the bi-weekly payment comes due, there might be three payments due in a given month.

From talking with sales people, I gather it isn't always - maybe not even mainly - the actual selling price of the car that matters; it's whether the customer can carry the loan payment (or lease payment), whether (s)he can afford to pay for the vehicle on an on-going basis.

I guess whatever keeps the rolling stock rolling out the door is good for business...

 

Comments

[Brian]

I always tell my friends never buy based on payment. If you have a monthly budget, figure out what purchase price that represents and use that as your bargaining limit. If you go the other way, dealers can manipulate the price to fit your payment and sometimes it ends up costing you more overall. It's not just Ford, all the way up to BMW and Audi do this. Looks like a good price, but then you read the fine print and realize the advertised price is a lease and assumes $6-8000 down and is on a base model with a rediculously low kilometre limit.