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Wednesday, September 16, 2009

Smackdown: 99 cents vs. $1

Yesterday one of our faithful meebo patrons asked a question that had been plaguing him in his sleep: Why do so many stores in America use 99 cent pricing instead of rounding up to a dollar? I can see how this question could keep you awake, dear Meebo patron. I, myself, spend countless hours pondering similar questions in the middle of the night: Why are there 8 hot dogs in a package and 6 buns? Why do birds suddenly appear? Why does the dryer steal socks? These are all worthy of consideration, but this question has a certain depth that mine lack!

It seems that there are a few schools of thought regarding the mysterious missing penny. One relates to a newspaper feud and is explained in this synopsis culled from The Book of Strange Facts and Useless Information. Maybe so, maybe not.

The other involves classic marketing strategy. In my research, I've found it referred to as odd-number pricing, nine-ending prices, and even simply psychological pricing. Once upon a time, it seems that the capitalists of America formed a think tank and discovered that most people are drawn toward a price that ends in 99 cents, even when compared to another same item priced at only once cent more. According to a 2009 article in Advances in Consumer Research, "30% to 65% of all prices end in the digit nine." Wow! This article dates the occurrence back to at least the mid-1930s.

I knew that those big corporations were tricksy, but it's pretty amazing how they use our own minds against us! The lesson learned? Pay attention to the actual price!

Shih-Chieh Chuang, Chaang-Yung Kung, Yin-Hui Cheng, Shu-Li Yu. The Effects of Nine-ending Prices and the Need for Cognition in Price Cognition. Advances in Consumer Research - North American Conference Proceedings; 2009, Vol. 36, 973-974


  1. I would also add in that some retail stores use the prices as codes. 99 cents was the norm but if you saw 98 cents or 96 cents on something when I worked at Circuit City in the late 90's it meant the item was on closeout. I think the 98 meant a new version was coming next and 96 meant it was going completely away. Its been almost 10 years since I worked there though.

    Also if you can, is there an answer to the dryer eating socks????

  2. Thank you for the flashback to the Carpenters "Why Do Birds Suddenly Appear? I now have that song running around in my head. Not a bad thing on a dreary day.


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