Why the Price of Products Often Ends in '.99'

#Products

Tue, Jun 12th, 2012 12:00 by capnasty NEWS

If you've ever wondered why stores have items on sale that seem to always end with '.99', the reason is simple: it's because we're idiots:

Two business school professors, Eric T. Anderson and Duncan Simester, published the results of some field experiments in 2003 in which they had teamed up with a mail order company and manipulated the advertised prices. A $59 dress, for instance, would sometimes be priced at $54 or $64 instead. Mr Anderson and Mr Simester found that prices ending in "9" were more likely to find buyers, relative to the prices ending in "4". This was always true but particularly if the product in question was something new. That last fact does suggest that the "9" was conveying overtones about an unfamiliar product. It's some support for the "shorthand" theory. But there's a catch.

Which is?

Several studies support the more intuitive idea that consumers simply ignore the pennies and round down. Whatever the reason, the fact is that 99p endings are extraordinarily common and they appear to attract consumers.

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