

Why Things Cost $19.95 - yagibear
http://www.sciam.com/article.cfm?id=why-things-cost-1995

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m0nty
Bill Bryson points out (can't remember which book) that pricing something just
below a round figure (eg 0.99 or 4.99) would force shop assistants to ring up
the purchase in most cases where they'd be given a dollar or a five dollar
bill, rather than just pocketing the cash. So initially, it was a way to
enforce honesty on employees, and the other benefits became apparent later.

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staunch
Why wouldn't sales tax make it roughly the same price either way?

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m0nty
I'm not sure I understand your question, but I think this might have been in
those glorious days before sales tax.

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aggieben
I think the natural defense to forced precision calculations is to simply
round everything up (never down). If it's $19.35, you round up to $20. In
fact, I've even gotten to the place where I really only use the most
significant digit, rounded up, in my rough-cut financial judgments. If I see a
car priced $14,000, my subconscious says to itself "I would never spend
$20,000 on a car!". It doesn't always work, and there is a time to be more
precise, but this sort of order-of-magnitude internal bartering with myself
helps keep my more compulsive self in check.

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graywh
I always say prices have no more than 2 significant digits.

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eru
At least for consumer goods.

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ardit33
interesting, many good restaurants charge full dollar menu. Like 7, 9, 11. You
never see something like 8.99 unless it is a chain.

Maybe b/c, they realise their clientele is: 1\. Smart enough to do the
rounding up themselves. 2\. Want to look more sophisticated by showing they
are not using cheap tricks to nickel and dime customers.

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dane
Good example. Perhaps they're trying to encourage you to tip in whole numbers,
further away from your "mental anchor" than you would with a number like
$8.99.

Maybe a $10 meal nets a carefree $2 tip whereas a $9.99 meal merits a
meticulous $11.49 total in the customer's head.

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samwise
This is the kinda research that walmart bases their whole business on. If you
even notice that every item in walmart is 12.37, 17.46 or something to that
effect. That gives people that impression that the price is set as low as
possible. when in fact it's just made to appear so.

fyi: i hate walmart, go target

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zealog
The article is very interesting on the psychology of how it works and
anecdotally I would completely agree with the findings.

However, the title is putting the cart before the horse. Just because people
respond to things this way, it is not the cause of the tradition.

The best researched article I could find (that matches a story from an old
book I once had) about the origins of the $.99 can be found here
<http://www.straightdope.com/classics/a3_166.html>

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eru
On the other hand: Perhaps it makes the tradition survive?

Maybe like in the theory of evolution - things get started by chance by stay
for a good reason.

The straight dope was interesting, too.

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maxwell
Turns out most people are statically typed.

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jamesbritt
There's a self-service laundromat I go to, and the have you charge up a
reusable swipe card.

The card machine takes 1's, fives, and so on; bills, no coins, but the
machines themselves cost oddball amounts.

The big-load washer was something like $5.63, and the drier was $0.69 for 15
minutes.

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eru
So you always have change left on your card and a reason to come back. You do
not want to give them the remainder for free - do you?

