Why Do Sales End in 99¢?


All big-name retailers, supermarkets, restaurants and even shops in video games have been doing this. Prices ending in 99¢ account for more than 60% of all sales. The pricing is so natural that sometimes we forget about it all together. But what is the point in it if sales tax brings the price over and up to a dollar anyway? It turns out that this psychological marketing strategy is one of the most clever schemes ever created. This crafty pricing system has been around for more than a century. There are multiple reasons why prices work this way.

The left-digit effect suggests that buyers read left to right, seeing the first or second digit the fastest and disregarding the rest. The customer automatically assumes the price, not seeing the cents, making the item look cheaper than it already is. The 99-95¢ or a dollar amount ending in 9 ($49) gives the customer the feeling that an item is on sale or is of high quality. As it turns out people are less inclined to buy items that are exactly $50.00 and are more willing to buy if the price is $49.99.

The origin may have come from a newspaper pricing rivalry. The Chicago Daily News in 1875 tried to compete with other newspapers that cost a nickel by setting their price to a single penny. Pennies were not common, so the founder of the newspaper, Melville E. Stone, told salespeople to set their prices a cent under a dollar so that they would get more pennies in change.

It can also serve as protection from cashier theft. When the customer pays for an item with a whole dollar payment, the cashier has to open the cash register to give change and record the sale, or else the cashier could have just pocketed the money.

There may not even be a reason at all. The trend has been going on for so long, it may be just that it's tradition nowadays.

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