Deeper look at why prices end in .99

The companion site for the book Life's Little Mysteries: Answers to Fascinating Questions About the World Around You has a short post summarizing why most prices end with .99. Of course, there's the obvious "psychological pricing" reason that when a shopper sees something that costs $5.99, the .99 is subconsciously ignored, making the item much more attractively priced than if it was $6. But more intriguing is this bit summarized from a 2003 Harvard Business Review article titled "Mind Your Pricing Cues" (PDF). From Life's Little Mysteries:

"Some retailers do reserve prices that end in 9 for their discounted items. Comparisons of prices at major department stores reveal that this is common, particularly for apparel," wrote Eric Anderson, professor of marketing at Northwestern University's Kellogg School of Management, and Duncan Simester, professor of management science at M.I.T.'s Sloan School of Management, in their article.
For instance, the clothing stores J. Crew and Ralph Lauren typically price regular merchandise in whole dollar amounts and stick 99-cent endings on discounted items. These retailers purposely avoid ending their regular prices in .99 so that consumers won't associate the items with cheap deals. By contrast, stores attempting to project an image of selling underpriced goods will make it a point to end all their items' tags – regularly priced and discounted alike – in .99.

"Why Do Most Prices End in .99?" (Life's Little Mysteries)

David Pescovitz is Boing Boing's co-editor/managing partner. He's also a research director at Institute for the Future. On Instagram, he's @pesco.

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http://www.facebook.com/dlow.rehpotsirhc Christopher Wold

I used to work at Officemax and all prices ended in 9, except for clearance items which ended in 0
fieldsls

At Target you can tell how many times it has been discounted by how much below .99 the price is. At .97 it has been discounted twice.
Andy Ewing

I always heard that it was due to the advent of the cash register. Bosses wanted to keep their clerks honest and force them to use the register to make change instead of their own pockets (e.g., giving the customer back three dollars instead of four and hoping they won’t notice…much harder to do when you have to give back coins as well.) Perhaps this 99 cent pricing behavior has evolved over time.
Alvis

I refuse to play this game. I write $2.9X as “about $3″ at this point.
- GTMoogle
  
  Frustratingly, your brain isn’t on the same page and the prices will still affect your behavior, even if you remind yourself to correct it in your head every time. :(
  - bcsizemo
    
    Implying some people don’t automatically figure out taxes and add those up in our heads as well.
    
    It’s 2011, I seriously hope you don’t think everyone is controlled by their subconscious and emotions.
EoghanGriffin

When the euro came in Ireland they mostly stopped doing this practise thankfully. Really get a loss less junk change you carry around now.
JeffF

I have always wondered if the .99 thing really works to make people think things are cheaper.

I remember, in gradeschool, a significant amount of effort going into getting us little kids to realize that 39 is less than 40, because I suppose we tended to not pay much attention to the order of the digits, but out untrained little brains were pretty sure that 9 is a big number and 0 is a little one and 3 and 4 are about the same.

I suppose that training worked very well.
Guest

Naturally, the book is $12.99

the link to the companion site isn’t working, takes me to a 404 page on BB
http://twitter.com/jen_canary Jennifer Ford

I’ve always rounded prices up and didn’t get that other people didn’t until I remarked to my dad that something was $11* dollars, and he looked startled and said, “No, it’s $10!”

*price not actually price we discussed as I can’t remember actual price.
http://twitter.com/_BluShine Mark

I’m pretty sure the psychological aspects of pricing things .99 are next to nothing. Perhaps a kindergarten student would have trouble telling the difference, but when the practice is as ubiquitous as it is, it really isn’t going to have some sort of “subconscious effect”. As a previous commenter said, the practice was originally to force clerks to open the register to make change, and in many cases it still serves this purpose. It’s interesting that some stores are now using it to indicate discounted products.
- http://www.facebook.com/profile.php?id=1221662664 Mike List
  
  people want to make a relatively small number of assumptions, then base all their actions on those assumptions. doesn’t work, but that’s what they want.
http://twitter.com/sqezyplus Sam

Isn’t the price usually something .99 so that it has to go in the till, and not be pocketed by the staff, I am pretty sure that’s where it started.
http://twitter.com/sqezyplus Sam

Just like other have said before me
MollyMaguire

Grrr! I hate this practice, mostly because I also hate carrying coins around and a dollar is so little money anyway. I always mentally round up and put my change in the charity box.
Mandar Harshe

Well, when I was in Florida, the tax there was 6%. When an item ends in .99, the sales tax is 4.94 cents and it gets rounded to 5 cents. I may be over thinking, but don’t you think it’s smart to have all those 0.06 cents add up over the course of the month. I guess they get to keep this unaccounted change (I might be horribly wrong with this).
- Just_Ok
  
  shhh. This is not happening. Move along.
nixiebunny

I price my products this way, yet I hate it when others do so. Go figure.
Art Carnage

At REI, you can tell which items are and are not eligible for dividend rebate. If the cent digit is either a 3 or a 9, it’s a sale item, and will not apply towards your yearly dividend.
- bigfatlamer
  
  Actually, the .X9s are dividendable, the .X3s are not.
http://www.facebook.com/JeffreyKarter Jeffrey Karter

When one spends most of one’s time with other people of like and/or intelligent minds, it’s easy to forget that WE’RE NOT LIKE EVERYONE ELSE.

Most people aren’t as smart as we are. We’ve trained our minds to think of $2.99 as being about $3, and much more than $2. The same is NOT true for most people. Most people don’t think that much about numbers.

Other comments: Gasoline prices are a great example of “end in 9″ pricing. When was the last time you saw gas that *wasn’t* priced at xxx.9 cents per gallon? I think even most of us don’t make the effort to convert $3.549/gal to $3.55/gal, only because the 9/10ths of a cent is so trivial.
- Gulliver
  
  When one spends most of one’s time with other people of like and/or intelligent minds, it’s easy to forget that WE’RE NOT LIKE EVERYONE ELSE.
  
  When I see $5.99 I think $6.48 (unless I’m shopping Amazon) thanks to years of being Pavlovianly conditioned by the 8.25% Texas sales tax. Does this make me smarter than you round-number simpletons? Or just stingier?
  
  I think the smart money’s on stingier.
awjt

I’m not worried about the xx.99 part. I’m worried about the xx part. Where the HELL is all my money going these days? Since when does a gallon of milk and a loaf of bread cost me TEN BUCKS?!?!11!!
- riorico
  
  Since you’re shopping at Whole Paycheck, er I mean Whole Foods. Go down the block to Dented Cans and prices are a bit lower.
nosehat

Gas stations are even worse, since they add an extra decimal 9 at the end of their price per gallon. So you pay $3.999 per gallon, and you think “Whew, at least I’m not paying $4 a gallon!”
- Gulliver
  
  Gas stations are even worse, since they add an extra decimal 9 at the
  end of their price per gallon. So you pay $3.999 per gallon, and you
  think “Whew, at least I’m not paying $4 a gallon!”
  
  It adds up:
  
  http://www.youtube.com/watch?v=Xxy4eJxx3zI
http://twitter.com/Kevin_Sole Kevin Sole

At Future Shop, .99 is regular price, .95 is “gone when gone” (ie. they won’t be shipping/receiving any more of this item), .96 is open box, and .97 is clearance. You can get a deal on pretty much anything not .99.
Narmitaj

BBC Radio 4 had a series called Genius, wherein members of the public presented possibly-brilliant ideas for consideration by a panel of comedians, such as selling socks in threes, filling bubble-wrap with helium to cut down package postage costs, and printing lonely hearts messages on the backs of ready-meals for one.

The idea I remember that’s relevant here is producing a 99p (or 99c) coin for use in these kinds of situations.

But with all the suggestions that it the .99 thing started because of a need to open a till, I guess then shopowners would pick .98 or .93 or something. The corrupt salesperson thing can’t be the whole story, though – I am sure used cars cars aren’t priced with numbers like 10,999 or 36,994 just to get someone to open the till and give a bit of change.
http://www.facebook.com/profile.php?id=781965222 Ken Breadner

And yet, you take an item that regularly retails for 99 cents and put it “on sale” for $1…and you’ll sell between three and six times as much. Over ten years in the grocery industry, I have learned to *dread* “Loonie/Toonie/Threenie” flyers.
- Antinous / Moderator
  
  My experience with charity bake sales was that you could sell $1 brownies a lot faster than 50 cent brownies. Perceived quality.
http://www.facebook.com/people/Siouxmoux-Riopel/593732867 Siouxmoux Riopel

At Donny’s Discount Gas is a gas station in Springfield,There gas prices ends in 8/10
Doug Black

bcsizemo,

It’s 2011, I seriously hope you don’t think everyone is controlled by their subconscious and emotions.

Not everyone, just living humans.
- phreakincool
  
  Hey Doug, I think your sarcasm meter is broken.
WaferMouse

Prices at 99p/c are required to keep small amounts of change in circulation. Mystery solved.
Jewels Vern

The most elaborate explanation I’ve seen is in Scot Morris’s Book of Strange Facts & Useless Information (1979):

“In 1876, Melville E. Stone decided that what Chicago needed was a penny newspaper to compete with the nickel papers then on the stands. But there was a problem: with no sales tax, and with most goods priced for convenience at even-dollar figures, there weren’t many pennies in general circulation. Stone understood the consumer mind, however, and convinced several Chicago merchants to drop their prices–slightly. Impulse buyers, he explained, would more readily purchase a $3.00 item if it cost “only” $2.99. Shopkeepers who tried the plan found that it worked, but soon they faced their own penny shortage. Undaunted, Stone journeyed to Philadelphia, bought several barrels of pennies from the mint, and brought them back to the Windy City. Soon Chicagoans had pennies to spare and exchanged them for Stone’s new paper.”

More to this story:
http://www.straightdope.com/columns/read/720/why-do-prices-end-in-99
http://pulse.yahoo.com/_QEGE2JB7EGME6CJRAO44XHU7WQ Mm Jr

Nobody has mentioned this about the price of gas: the last 9 is always written as 9/10, but with the 9 over the 10 so it’s smaller than the other digits. It never fails to infuriate me that this is legal. If the last digit can be smaller, shouldn’t the first two be progressively smaller as well? AARGH.
francoisroux

Here in South Africa we stopped using 1 and 2 cents, since their value was less than the metal they were printed on, or some such. Retailer however kept their prices at .99, choosing to round down to .95 when you do a transaction. So I always wondered why they didn’t just make everything .95 to begin with. And it wasn’t until much later that I realised the reason for this. If you buy 5 .99 items, you made .20 extra and no rounding is needed.

Anyway, I’ve been educating my kids since and early age that something doesn’t cost R1 when it says R1.99, it costs R2 and that’s it. They’ve now caught on to it and always points it out in the stores that still makes use of the practice(which is basically all of them…).
Daemonworks

Please note – the x.99 trick doesn’t work on everyone – it just works on enough people to make a difference.
MrWeeble

of course as more people realise this, the more dishonest it looks. The Iceland supermarket in the UK prices it’s goods at an even £1, £2 etc. with the slogan “clear-cut prices”. This gives the impression they are being “honest” and “straight-forward”. it appears it has come full circle
http://shelftalk.net/ Scott Sanders

404′ed link in the post. :(
SuperMarkert

I read a similar story once about Wal-Mart, except that instead of .99, they like to pick random numbers such as .74 or .83. This way, customers see the odd number and trick themselves into thinking that the store put a lot of time and effort into determining that very specific number, and therefore it must be selling it at an absolute minimum. Their ads even show the “falling prices” that drop a few cents to a random number less than .99.
Soliloquy

I find it interesting/odd how many customers I get that forget tax exists. We use .99 cents pricing and I get a lot of people who will hand me one dollar for a .99 coke and try to walk away before I can tell them it’s going to be $1.05.