There might be something to this as well. Having to charge something that only costs a couple of bucks just seems kinda lame. And buying something for $5, only to pay another $5 for shipping is really, really lame.
On the Wal-Mart situation, IIRC, I remember reading somewhere that WM also uses certain “ending numbers” for closeout items, and the “7” seems to be the standard for most of their items from what I’ve seen around here.
I have a friend who is a lawyer - he said they told him in school that it’s because of lawsuits. Something like if a product is below $20 there’s no liability or you can’t sue the company, or maybe it keeps it in a lower bracket of the court system (like super small claims court!). Anyone ever hear about this?
The real answer is that those tv sales pitches are tested and tested and tested before smaller groups to see what works the best. There was a recent article in the Wall Street Journal (you need a subscription online and I don’t have one) that showed testing for a product that sold better at $19.95 than $24.95 - but also sold better at $19.95 than $14.95.
When an item sells for $19.95 it’s not the .95 part that’s interesting - all the previous posters have covered that bit of psychology. It’s the 19 part.
The 19 tells us exactly what the current state of the economy is. Because the important point is that it is not always $19.95. Years ago that would have been too expensive. I remember when everything sold for $9.95. Now sellers are finding that they can bump the number up and still get sales, and also that they can sell ever more expensive items by a series of payments.
I’ve seen several tv commercials for products selling at $29.95 per payment. And Bose is selling its expensive radios and CD/radios for $49.95 per payments - in ads that never reveal the full price of the items!
So there is something special about $19.95 - now. Next year or ten years from now it will not be special at all. It will in fact be a failure.