Menu Close

Why you need a ‘price vocabulary’

Stephen Chambers

‘Price vocabulary’ is a coded pricing system that US stores such as Costco use to convey secret messages to shoppers, explains Utpal Dholakia, writing for Harvard Business Review.

For example, when the warehouse giant puts a price tag on an item ending in $.99, it indicates that this is the usual price for that product and there’s no discount attached. Switch that to $.97 and you are telling savvy customers that the item is on special offer, possibly at the end of a season or to speed up slow sales. 

Likewise, tags with prices ending in $.00 or $.88, an asterisk, a colour or a date code, each have their own specific, unadvertised, meanings.


It’s a system used successfully in many other stores including Walmart, TJ Maxx, BJ’s Wholesale and Home Depot – each with their own language.

According to Dholakia, it’s an initiative that retail leaders and marketers would do well to explore in the quest for increased sales and customer loyalty.

He says: “A price vocabulary provides a novel and inexpensive way to create sustainable differentiation and increase customer engagement.”


This secret price vocabulary is packed with information that allows managers and employees to track pricing and offer consistency in all stores. 

The bonus is that it’s something customers can engage with and respond to. The fact that it’s a little bit cryptic gives the shopper a sense of special connection to the company because it’s a system that rewards people “in the know”.

Knowing that a $.97 price ending means the item is a manager’s special for a limited period only gives customers a sense of advantage and an opportunity to buy at the reduced rate.

Some of the language is based on long-established norms – such as $.99 prices representing good value for money. 

“Consumers who become literate in a seller’s price vocabulary can make more informed and advantageous buying decisions,” says Dholakia.

“Some may even be able to form behavioural scripts and habitual buying patterns that incorporate price vocabulary into their purchase decision calculus.”


There are three key benefits to having a price vocabulary:

1) It sets you apart from competitors. When your unique language becomes established, customers in the know associate it exclusively with your brand – as opposed to other retailers. It improves their overall shopping experience and encourages them to start their own conversations about it.

2) Its mystery is alluring. Because your price vocabulary isn’t traditionally publicised, people feel special when they discover it. Shoppers like the sense that they know something other people don’t. 

“Price vocabularies today are a lot like secret restaurant menus. They remain mostly unacknowledged by the company, and it’s often unclear whether they exist at all. The menu’s undercover aspects can generate excitement and actively engage customers.”

3) It unlocks monetary benefits. Once a customer understands your language, they can use it to their advantage – if they read it correctly. Certain price endings can indicate that an item is about to be further reduced, so a shopper might delay buying. Another code will tell them it’s their last chance to purchase at the best price, so they will act immediately.

With practice, the price vocabulary can effectively become a secret loyalty rewards system that gives clued-up customers the opportunity to scoop up your best bargains and feel privileged to do so. 


Dholakia is surprised by how few companies have, so far, created their own language around pricing, given how relatively inexpensive and effective it is. He highlights the potential economic advantage to retailers of “introducing structure and consistency into the process of setting and changing prices”.

A price vocabulary is also something that can grow and change over time. Returning to the restaurant secret-menu example, he cites the evolution of the In-N-Out Burger fast food chain where the phenomenon built up gradually from the 1970s to the present day. Its secret menu had so much impact that it was reinvented as the Not-So-Secret menu – something that still engages customers.

Having a price vocabulary is definitely an initiative to consider if you are a retailer looking to enhance your customers’ journey.