Rounding Rules is a pricing strategy based on price rounding. This method's objective is to influence the consumer's decision to buy by displaying prices in a friendlier format.

A common use of this technique is seen when products are sold with a "one cent discount". Instead of selling a TV for U$ 4000,00, the store displays a price of U$ 3999,99.

The idea is to create the impression that the product is being sold at a more accessible price.

A rounding rule's creation depends on three conditions:

• The price range
• The number of digits being rounded
• The rounding methods.

The rounding rules for prices are applicable only to the initial value of the product before the application of any discounts or promotions (base price). They do not apply to fixed prices and promotions. In these cases, the amounts are considered final and exact, being displayed to customers exactly as they were defined, without any additional adjustments.

The price range is the criteria that determines which SKUs will be eligible for the rounding rules. You will have to decide which price ranges will be affected by the rounding.

You have to define have many digits will be rounded based on a specific rule's established price range.

If, for example, the price range is between U$ 100,00 and U$ 500,00, the maximum number of digits that can be rounded is four, since the upper limit of U$ 500,00 is made up of five digits. In this scenario, you can also choose to round just three, two or one digit.

The maximum number of digits affected by the rounding rules varies, depending on the number of digits within a rule's established price range.

To complete the rounding rules configuration, you should choose between one of three possible rounding methods: the rule of nine, the rules of nines or the rule of zero.

To simplify each method's explanation, we will consider that the rounding applies to the first two digits, from right to left:

• Rule of Nine: the second digits, from right to left, will be replaced with 9 and the first will be replaced with 0. As an example, let's use a price of U$ 100,00. the system will consider the two closest values which end in "90", which in this case are 100,90 and 99,90. Since the difference between 100,00 and 99,90 is smaller than that between 100,00 and 100,90, the price will be rounded to 99,90.

• Rule of Nines: the second digit, from right to left, will be replaced with 9 and the first digit will also be replaced with 9. Let's use the same example as before, U$ 100,00. The system will consider the two closest values which end in "99", which in our case are 100,99 and 99,99. Since the difference between 100,00 and 99,99 is smaller than that between 100,00 and 100,99, the price will be rounded to 99,99.

• Rule of Zero: the second digit, from right to left, will be replaced with 0 and the first digit will also be replaced with 0. Let's use a price of U$ 100,25 as example. The system will consider the two closest values which end in "00", which in our case are 200,00 and 100,00. Since the difference between 100,25 and 100,00 is smaller than that between 100,25 and 200,00, the price will be rounded to 100,00.

Let's assume that a new TV is sold for U$ 5000,00. However, you notice that this product's sales volume is not as high as expected.

To turn this situation around and attract new customers, you can use a rounding rules strategy by potentially applying the Rule of Nine functionality together with a three digits rounding method.

This would result is a lower price of U$ 4999,00, giving the impression of the product having a more accessible price.