A&W's Pricing Strategy

A&W, unlike its competitors, does not utilize an odd-even pricing strategy, or "charm pricing". This type of strategy is a type of psychological pricing. Although it seeks to differentiate itself, A&W is at a disadvantage, simply due to the way in which the mind processes visual numerical information.

Interestingly, the use of prices that are not rounded to the whole dollar value (ex. $4.95 vs $5) causes what's referred to as the "left digit effect". Studies have concluded that people perceive an attractive price through examination of the furthest digit to the left. For example - an A&W value menu burger sells for $2.95. If a similar burger was displayed on the menu beside it for $3.00, although 5 cents cheaper, the smaller number is more appealing. People will see the number 2 as definitively less than 3. Therefore, this pricing strategy is far more effective as consumers believe they are getting a better deal.