So, as some of you may know… prices in USA often end in 99cents. a toothbrush is $2.99 for example. Why is that?
There’s a few main reasons…. all seem relatively valid.
1) it looks cheaper. A DVD player looks cheaper at $99.99 than $100. to the customer. its only a penny, and might be worth it due to increased sales. this is the most common explanation.
2) in the 1880s the newspapers were competing for price competitions. during those times, 9 pennies was a lot…. more than todayy…. but less than a dime. so… the argument from earlier is still here…. it looked cheaper. it became so widespread in USA that it just became habit. it stayed a habit.
3) around the early 1900s….. store owners were scared that if you pay $10 for something… you give cashier a $10 bill. the cashier could simply say thank you, NOT put the sale in the register, and just take the cash… but if its $9.99… then the customer needs that penny back. so you HAVE to put the sale in the register to get the penny… makes it hard to steal.
4) taxes. PA sales tax is 6%. $0.99 plus tax = $1.05. its easier to do accounting after the sales are done. at the end of the day…. with sales tax… the numbers in many states end up with cleaners numbers at the end of the day for accounting. this argument is very debatable… but i’ve seen it works in some places.
an interesting point about that is… places that DON’T pay tax…. seem to often NOT follow this rule. they get cash, lie on taxes…. and charge a fixed price that’s already clean. not ending in 0.99.
The real kicker? there’s a lot of online businesses, right? Avira antivirus. today’s special… $26.99!!! 🙂 so…. they are a romanian company. the explanations i just gave you… do not hold in europe… where traditionally they didn’t sell things in $dollars, and also don’t have the background of $0.99. so… why do they do it? is it just cause they saw americans doing it, and said… ok… lets try that! or do they have a real legitimate reason?
i have no idea.. just thought it’s funny.