Why are prices always like $xx.99? For example instead of $600 for a TV it's always $599.99.  Why do retailers always put it like that?

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pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

The reason for this is that there is a belief, backed by some studies but now challenged by others, that such pricing leads to higher sales.  The belief is that people are more willing to buy goods whose prices end in .99 than if they were 1 cent higher.  This is said to be particularly significant in cases like the one you mention for the TV.  It is said that $600 has a greater psychological impact than $599.99.  Because of the "6" at the beginning, the price seems much higher than it does when it begins with a "5."

There are some studies now that dispute this, but the practice seems likely to continue if only because it now seems customary.

acompanioninthetardis's profile pic

acompanioninthetardis | Student, Undergraduate | (Level 1) Valedictorian

Posted on

It gives the allusion that its cheaper, technically it is but by a penny, which to us is almost nothing, so it makes people think like they are saving a dollar since what people usually focus on is the dollar figure rather then the pennies. This method is surprisingly effective. 

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