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In this article, we build on the existing literature on price endings in the fast-moving consumer goods and luxury pricing to highlight the potential paradox of adopting odd pricing (i.e. setting prices just below the round number) for luxury goods, which should mostly use even pricing (i.e. round numbers). In a first experiment concerning luxury handbags, we test the impact of three types of price endings (–90, –00, and “other”) on luxury image and its sub-facets. We propose four mediators of the relationship between price endings and overall luxury image, that is, quality, prestige, uniqueness, and expensiveness. In a second experiment, we find that price endings have connotations specific to the luxury sector and to different segments of consumers. We conclude with recommendations to help pricing managers strategically adjust their price-ending practice to target different consumer segments.

Purpose Going beyond odd and even prices, this paper aims to explore the rationale behind the widespread practice of setting prices ending in “50” or “80” in the luxury industry. The authors argue that when they set such prices, managers agree to reduce their profit margin to limit the anticipated guilt luxury consumers associate with luxury shopping while also protecting their brand luxury. The authors label these prices compromise prices and formally define compromise pricing as the practice of choosing a price’s ending so that the price falls below (but not just below) a round number to boost sales without damaging brand luxury. Design/methodology/approach Following the observation of the overrepresentation of prices ending in “50” and “80” in the luxury clothing category, an experiment explores the impact of compromise prices on anticipated guilt and brand luxury in the luxury watch category. Then, to identify when luxury pricing managers typically favor compromise prices, multinomial regressions investigate prices collected on two online luxury fashion retailers for the luxury clothing and handbag categories. Findings Compromise prices reduce the anticipated guilt luxury consumers associate with luxury shopping compared with even prices while enhancing brand luxury compared with odd prices and interestingly, with even prices also. This finding gives rationale to luxury managers’ preference for compromise prices in the ninth hundred (i.e. €X950, €X980), especially for higher-priced products, i.e. when the potential for price underestimation and/or the risk of damaging brand luxury are more important. Originality/value This research contributes to the field of luxury pricing by providing evidence to an original price-ending practice, coined compromise pricing, which consists in agreeing to a slight reduction in prices and unit margin to protect brand luxury.

En se basant sur deux champs de recherche, les terminaisons de prix dans les biens de grande consommation et les prix des produits de luxe, cette recherche met en évidence le paradoxe résultant de l’utilisation de prix odd (i.e. prix en deçà d’un prix rond) dans le contexte des produits de luxe où les prix devraient être majoritairement ronds. Dans une première expérimentation portant sur des sacs à main de luxe, nous testons l’impact de trois types de terminaisons de prix ( odd ou -90, rond ou -00 et ‘autre’) sur l’image de luxe et ses facettes. Nous étudions la relation entre les terminaisons de prix et l’image globale de luxe et proposons un modèle de médiation en parallèle où les médiateurs sont la qualité, le prestige, l’unicité et la cherté. Dans une seconde expérimentation, nous constatons que les terminaisons de prix véhiculent des connotations spécifiques au secteur du luxe et à différents segments de consommateurs. Nous formulons des recommandations visant à aider les responsables en charge de la tarification à fixer les terminaisons de prix selon les segments de clientèle.

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