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Why Does The Price Of Many Products End in 95 or 99?

by Brian Jud
Bowker | Tue Feb 15, 2022

It seems it would be a lot simpler for both retailers and consumers if the price of that $29.95 book were instead a nice, round $30. There must be a good reason why the prices of so many products end in 95 or 99. But what is it? 

Two theories stand out. One suggests a ploy to coerce the customer into a purchase, the thought being that a price of $29.95 seems more palatable than one of $30 (though sales tax would likely shove the total over $30 anyway). The theory seems plausible even if it does not place much value on our intelligence. 

The practice of ending prices in 95 or 99 began in the late 1880s, when newspapers started carrying more advertisements that included prices, says Scott Morris, a self-described collector of strange facts and useless information. By advertising an item at 99 cents instead of a dollar, a store could undercut its competition and, theoretically, gain customers. This practice would not cost the store much money, and customers would feel like they were saving money. Everyone would be happy. 

A second theory focuses on a big problem in the retail business – employee theft. According to this explanation, if an item’s price is a round number, it is easier for an employee who is handling the cash register to pocket the money handed over by a customer. The customer is more likely to have the exact amount if the cost is an even $30. This means that the clerk does not have to open the register to provide change and can simply slip the money into a pocket. No record of the transaction exists, and the clerk can simply claim that the item was stolen if the issue arises. If a product costs $29.95, on the other hand, the employee probably will have to open the register to make change and a record of the transaction will be created. 

The loss-prevention theory might have once made sense, but it is less solid today considering the widespread use of credit and debit cards, not to mention sales tax. So, we are left with the motion that consumers perceive a bigger difference between $29.95 and $30 than actually exists. 

Robert Schindler, a marketing professor at Rutgers University, relates this to the impression that a price ending in 95 or 99 indicates a discount. He also cites the tendency of consumers to give diminished attention to rightmost digits in a price. 
Excerpted from the book, Great American Trivia.

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Brian Jud is the Executive Director of the Association of Publishers for Special Sales (APSS – www.bookapss.org) and author of How to Make Real Money Selling Books and Beyond the Bookstore. Contact Brian at brianjud@bookmarketing.com or www.premiumbookcompany.com and twitter @bookmarketing

 

 

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