Saturday, August 21, 2004

The 99 Cent fallacy

David Pogue talks about .99 pricing, and claims that companies do this to dupe consumers into thinking that they are getting a good deal ($2.99 is less than three dollars!!). From what I understand, this practice originated as a means of keeping cashiers honest, in the days before credit cards. If an item was priced $1.99 and not $2.00, the cashier would have to enter the amount and open the cash register to give an extra penny to the customer, ensuring that all sales were entered, and that the cashier couldn't pocket the money if they were given exact change.

It is likely that this practice continues to this day because it was assumed that consumers perceived prices being lower, but I don't think any of us are dumb enough to fall for it any more.