This is a common retail tactic and is known as odd-even pricing in marketing.
If, for example, a television set would ordinarily be priced at 300 dollars, the store will set the price at 295 or 299.95 dollars to give the appearance of a lower price. Automobiles and other high-priced products are usually priced in this manner. For some reason 7,995 dollars has more appeal to a potential car customer than 8,000 dollars.
It also has to do with psychological pricing:
Retail prices are often expressed as odd prices: a little less than a round number, e.g. $19.99 or £6.95. Psychological pricing is a theory in marketing that these prices have a psychological impact that drives demand greater than would be expected if consumers were perfectly rational. Psychological pricing is one cause of price points.
The psychological pricing theory is based on one or more of the following hypotheses:
- Consumers ignore the least significant digits rather than do the proper rounding. Even though the cents are seen and not totally ignored, they may subconsciously be partially ignored. Some suggest that this effect may be enhanced when the cents are printed smaller
- Fractional prices suggest to consumers that goods are marked at the lowest possible price.
- Now that consumers are used to psychological prices, other prices look odd.
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This is a common retail tactic and is known as odd-even pricing in marketing.
If, for example, a television set would ordinarily be priced at 300 dollars, the store will set the price at 295 or 299.95 dollars to give the appearance of a lower price. Automobiles and other high-priced products are usually priced in this manner. For some reason 7,995 dollars has more appeal to a potential car customer than 8,000 dollars.
It also has to do with psychological pricing:
Retail prices are often expressed as odd prices: a little less than a round number, e.g. $19.99 or £6.95. Psychological pricing is a theory in marketing that these prices have a psychological impact that drives demand greater than would be expected if consumers were perfectly rational. Psychological pricing is one cause of price points.
The psychological pricing theory is based on one or more of the following hypotheses:
- Consumers ignore the least significant digits rather than do the proper rounding. Even though the cents are seen and not totally ignored, they may subconsciously be partially ignored. Some suggest that this effect may be enhanced when the cents are printed smaller
- Fractional prices suggest to consumers that goods are marked at the lowest possible price.
- Now that consumers are used to psychological prices, other prices look odd.
it seems like less money