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I've always hated seeing prices like this. It makes me immediately distrust the seller. I wish all prices would be "even", such as \$250 instead of \$249.98 or whatever. To me, it does not look cheaper. Not even subconsciously. It just makes me annoyed every time I see it. I know that people in general are dumb, but I still deeply question this practice.

Do stores sometimes make tests where they change all their prices to round numbers for a while and then compare their sales during that time to their normal sales? And does it then really show that more people buy things because they use these "silly" prices?

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    $\begingroup$ Interesting question. We normally expect some minimal research to back up your question, but given that this is such a widespread practice I think we can make an exception. Here is one interesting link: Fact or Fable: The Pricing Power of 9 $\endgroup$
    – Steven Jeuris ♦
    Dec 13, 2021 at 16:03
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    $\begingroup$ This link could be good "initial research" to base your question on: livescience.com/33045-why-do-most-prices-end-in-99-cents-.html $\endgroup$
    – Steven Jeuris ♦
    Dec 13, 2021 at 16:05
  • $\begingroup$ Not that related but I remember that 15 years ago or so it wasn't common practice in most European countries, so there has to be a reason why stores adopted this practice I guess? $\endgroup$
    – David Cian
    Dec 14, 2021 at 16:56

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This is called psychological pricing:

Research has suggested that pricing products at one cent below a whole number (e.g., 4.99 instead of 5.00) can be an effective method for increasing purchases. Although many reasons for this have been suggested, a commonly proposed explanation is that consumers tend to drop off, or pay less attention to, the rightmost two digits. This drop-off mechanism has garnered much indirect support, but only limited research has been conducted to directly test it. In this study, respondents provided estimates of how many products they could purchase for $73. Analyses indicated that respondents thought they could buy significantly more products priced with 99 endings than products with comparable 00-ending prices. Follow-up analyses showed that (a) errors made by respondents showed a pattern consistent with a dropoff mechanism, and (b) motivation to carefully provide quantity estimates moderated the effect. The study therefore provides rare direct evidence that the drop-off mechanism may contribute to the effectiveness of 9-ending pricing.

Direct evidence of ending-digit drop-off in price information processing

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    $\begingroup$ Quotes are great, but answers shouldn't be just quotes, or a link only for that matter. It's best practice to synthesize an answer with your own words. As of now I have the feeling I have to wade through an article abstract or something to get to the bottom of your post. What is your answer anyway? Your own answer (1st line) gives a definition, not an answer to the question. $\endgroup$
    – AliceD ♦
    Dec 23, 2021 at 15:36

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