How to Spend Money Wisely » Shopping

99 Cent Pricing Strategy

One of the strongest memories I have as a child regarding money was when our family held garage sales. I would get to collect different old toys that were “mine”, price them for sale, and reap the rewards of any sales. It was always fun to get  a small wad of cash, which I would often spend purchasing something else from a different garage sale that would sit untouched for a year or two. I have a memory of being taught how to best price things, however, and one day I remember learning about “99 cent pricing”. Basically someone told me that a lot of goods are priced at 99 cents, because it seems like it is so much less than the next full dollar. Would you not rather pay 99 cents for an item, rather than a full dollar? Or pay 9.99 as opposed to 10 dollars? I remember being shocked by this, realizing that there was some scary man out there who figured how best to manipulate my mind as I approached a product.

As the years progressed, I always thought that I was ahead of the game. As I was in a store, I would see an item priced for $23.99 and always mentally round it up to $24, plus tax. I felt like I was beating the system, making informed decisions, and not being fooled or manipulated. I would always correct others if they said an item only cost 5 dollars if it was priced at 5.99, or even 5.50. Over time, I noticed that less and less people seemed “fooled” by the 99 cent pricing, and started to wonder when companies would realize that we knew it was only a cent less. Lately, however, I have noticed that more and more prices have been rounded off. Subway’s $5 footlong (not $4.99 footlong), and McDonalds Dollar Value Menu (not 99 cent menu). WalMart will also often price their merchandise at a flat dollar rate. Real Canadian Superstore sells their clothing at even dollar values. So have the giant corporations finally realized we cannot be fooled?
Well, one look at the electronics at those same stores will have you wondering if they ever sit down as a group and discuss an overall strategy. Most higher priced objects still sell at a cent below the dollar, and will often add a few more 9s into the mix as well (999.99).
To further complicate the issue, consider how little we really care for a penny. When I was a child, I would be excited if I found a penny on the ground, but even as soon as I reached an age where I recognized the actual value of money, I stopped caring if I found a penny. It has gotten to the point where if I see anything less than a loonie on the ground, I probably won’t even pick it up because it is not worth the effort or the potential chance of getting something gross on my hands. So why would I mentally value a penny less than the actual cost? Pennies are so worthless, the United States has even begun to seriously consider eliminating them from their monetary system, as at the moment, it costs the US government more money to produce the coin than it is valued at.
Are you fooled by 99 cent pricing? What other tricks do retailers use against you? What steps do you take to get one step ahead of the corporate mind games?


  1. Sustainable PF

    Being a Canadian blog, I just want to point out that Canada is also considering the costs to produce a penny against its value and it may go too!

    That being said, the pricing “trick” I ran into recently was real estate pricing. The good ol’ $XX9,900 strategy. We did use a buyer agent to purchase our home and they would *always* included the $9,900 and I would *always* repeat the rounded up number. I wonder if once the purchase gets into the hundreds, or even tens, of thousands if the psychological trick still works?

  2. Echo

    Interesting topic. Here are some psychological pricing strategies taken right from my old restaurant menu design handbook:


    Use odd cents price to reduces the guests’ resistance to buy due to an illusion of a lower price

    Example: Instead of charging $1.50 for an item, charge $1.49 and it will be perceived to have a better price/value relationship

    As general rule, four “penny” price points yield the best financial results: 29¢, 49¢, 79¢ and 99¢

    Guests perceive a greater distance in price if the left most digit changes

    Example: A greater movement in price is perceived between $4.99 and $5.25 than between $4.55 and $4.99, even though there is a 26¢ difference among price in the first set and a 44¢ difference in the second set

    Breaking the dollar barrier is to be viewed as an important decision
    • The left hand digit should remain the same as long as economically possible
    • Once the barrier is broken, the guest will reestablish the new price/value relationship and continue to order the item, or switch to a cheaper one to meet their budget needs

    Pricing perceptions are different in a Fine Dining restaurant

    Example: Item priced at $15.00 can be moved to $15.50 then to $16.00

    Pricing to be determined based on the following:

    Price in 25¢ Increments Less than $5 (Best ending figure is the number 5)

    Between $7 & $10 (Best ending figure is the number 5 or 9)

    Between $5 & $7 Recommendation Price Price at either 55¢ or 95¢ Price at either 49¢ or 95¢

  3. Calvin

    I have found many retailers use the number “8” as in $3.88. I don’t know why. Does it look like a zero? It’s also hard to calculate the tax mentally to know the total price.

    By the way, do you find a lot of loonies on the ground, Alan? Where exactly? I can keep a secret.

  4. A.Rajah

    This is an interesting topic!

  5. My University Money

    I have found that my mind plays tricks on me when stores or ads throw up a 7 as the last digit. I am sucker for pitches like, “This should sell for $97, and while $47 would be a deal, I’m letting you have it today for ____” The real price doesn’t even matter, the first two numerals always get my attention. It’s been so apparent to me, I’ve actually started to be conscious of it now!

  6. Doable Finance

    As long as the public play it stupid, the merchants will take advantage of their pricing.

  7. Invest It Wisely

    Another trick that I’ve noticed lately is when they take 50g or a few hundred ml off the container size but the price remains the same…

  8. Virata Gamany

    While I agree many of us now think we “beat the system”, I think we often downplay the profound psychological effects these things have on us. Virata Gamany

  9. Virata Gamany

    I should note that it’s virtually impossible to control your emotional reaction. Virata Gamany VSM

  10. Edwin @ Stack The Chips

    Nowadays a product with a round number stands out more since we’re all so used to seeing the 99 cents at the end of it.

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