I purchased a new DVD Drive for $20.99. Why didn’t the vendor charge me $21.00? What is the point of charging $20.99? It happens elsewhere too. I bought a large coffee for $4.99, and a hamburger for $1.99. Why not charge me $5.00 and $2.00 even.
Is it tax related? Does the state benefit from the .99 cent charge as opposed to the nearest even dollar charge?
Do vendors want to make me do more math? Is my algebra teacher looking down on me from heaven and laughing at me? What gives?
Because people are stupid and will round down no matter how close the number is to the next digit up. I have a friend that rounds EVERYTHING down on prices. If it’s 4.99, to her it’s 4.00. If it’s 99.99 it’s 99.00. It’s irritating.
Even though I *know *that $19.99 is only one cent short of $20, there is a powerful psychological effect occurring that I don’t really understand. But at least with me, I don’t think of this is as being the same as $20 unless I explicitly say to myself (or to someone else), “That’s $20.” To say that “people are stupid” is oversimplifying the situation. IANAP but this is more complicated than a mere matter of intelligence. Marketers have always done this and done it successfully, but the vast majority of people do not lack the intelligence to count pennies.
This same approach is taken for items costing less than a dollar to homes costing millions.
Is tax already calculated into that price? In the US, tax is added at the cash register, so in Virginia if the sticker price is $5 I pay $5.25 at the register. So here, that pricing wouldn’t affect whether change is required.
Yes, if you’re the end-user. On the other hand, if you’re using it as an input to providing another good or service, then you can credit the GST paid against the GST received when selling the other good or service.
According to the column: the why is to make people think they are getting a good deal.
The when is that this became common in the USA in the 1920s.
The who (came up with this idea) is impossible to answer.
According to Uncle John’s Bathroom Reader (Sorry I don’t know which edition) the “less than whole number pricing” came into being as a way to ensure items were rung through tills, and also as a sales gimmick. The practice dates back to the earliest days of tills, and is also the reason old timers will remember till drawers that had a bell to signal they were being opened ( so the shop owner could hear if the till was being used). Hence the term “rung” through, ringing up a sale, etc. Ka-Ching!
If the 99 is such a wonderful come hither tool why does WallMart use so many 97s and 87s and 77s? I vaguely reading somewhere that someone had studied these things and 99 was not the best but that was long ago and in another country and …
I remember visiting a particular Native American-owned gas station in the Buffalo, New York, area in the late '90s. The gas price was 92.4 cents/gallon, which I think is the only time I’ve seen it end in anything other than 0.9 of a cent.