Why does almost everything advertised on TV cost $19.99 or $19.95? But wait, don’t answer yet! Why do they always think that we will think it’s cheaper if we pay in installments?
If you look in the archives, you’ll see this questions has been answered numerous times. That said, the answer is essentially that market research over the years has shown that some psychological barrier comes up at $20.00 where you believe it is expensive and have to consider it’s true value (as opposed to buying the item on impulse). Prices ending in $0.99 or $0.95 also seem cheaper and installments let you put off paying just like if you buy on a credit card. It makes it seem cheaper than it really is.
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In fact, Cecil himself has addressed it:
[url=http://www.straightdope.com/classics/a3_166.html"Why do prices end in .99?"
Arjuna34