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Secret price codes of top retailers

Daily Ticker

Kyle James says he has cracked the pricing codes for 14 retailers and he explains how he did it on his website Rather-be-shopping.com. James, a father of three children who lives in California, started his research last November as a means to save cash.

His detective skills have paid off: he tells Yahoo's Jeff Macke in the video above that he and his family are a few hundred dollars richer after following the price code method. For example, James saved $45 on a coffee maker and $200 on an HDTV from Costco. Both Costco items had a price tag that ended in .97 and a clearance asterisk, indicators James had waited for. Other savings include $14 on a pair of shoes his wife wanted from Target and $25 from various Home Depot purchases.

James’ technique, which he discovered with the help of current and former retail employees, is pretty simple: look at the last two digits of a product's price tag and memorize what the numbers signify (James also offers a cheat sheet in a recent blog post).

"A lot of these stores have these internal pricing systems where you can figure out if you're paying full price or a discounted price," notes James.

Here's what James has discovered (with the help of current and former retail employees):

If you're shopping at Target (TGT), a price tag that ends in .99 signifies that the item is full price. If the tag ends in "8" the item has been discounted.

The same number strategy works at many of the retailers James investigated, including J.C. Penney (JCP), Office Depot (ODP), Lands' End (LE) and Costco (COST).

At Kohl's (KSS), "NM" listed on the upper right hand corner of electronic shelf tags represents a new markdown. "S" means the item is on sale and "GV" tells the consumer (unknowingly of course) that the above item is a "Great Value" that won't last more than two days, according to James.

How accurate are James' shopping tricks?

Richard Galanti, Costco's executive vice president and chief financial officer, confirmed to Reuters that the big-box retailer employs a pricing code strategy to indicate markdowns and new merchandise.

"When a price ends in a '7,' usually it's a buyer designated markdown," Galanti told Reuters. Price tags that contain asterisks are what Costco refers to as "a pending delete. Sometimes an item's not selling well and we want to move it out, or it could be the end of the season. Let's say we've got three TV models and the latest and greatest comes out; we might want to bring the newest one in."

The Daily Ticker reached out to several retailers for comment on James' pricing scheme. Here's what they told us:

Target representative Evan Lapiska:

"At Target, we use a number of different factors to determine the price for an item. The ending digit of a clearance price is determined by several factors including the original retail price and the applied percentage discount. It is not possible to determine the final markdown or timing of the price change from the item’s current price."

J.C. Penney media manager Katie Coultas:

"While we can't comment on our pricing strategy for competitive reasons, we do want clear up that prices ending in .99 are not always clearance prices — these are generally our sales prices (you can visit jcp.com today and see many items on sale with a .99 price) and also does include some clearance prices."

American Eagle's (AEO) publicist Iris Yen:

"Currently, if the price ends in $0.95, it is the usually the original ticket price including Factory. When a price move is taken, we generally reflect $0.99 endings – this could be for either sales or clearance. However, although a customer can use the last two digits of the price as a loose guide for price movement, it isn't necessarily guaranteed or needed. AEO lists clearly whether an item is Factory, on sale or on clearance along with the price tag and supporting materials in-store. It is always clearly indicated online."

Kohl's, BJ's, and Land's End did not respond to requests for comment, while Sears said it does not discuss its pricing strategies.

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