Psychological pricing, also known as charm pricing, magical pricing and pretty pricing, seems to work for two reasons: we subconsciously prefer precise prices to round ones, and the ‘left digit anchor effect’ which means that £5.99 falls into the price category of ‘5’ rather than ‘6’ - especially when the right-hand figures are in smaller print.
Some experiments also suggest that you'll do better to price a product at £5.99 rather than at £5.50, possibly because the 99 feels like a reduction, whereas the 50 feels like the ‘proper’ price. Random-sounding numbers can work even better: £3.84, rather than £3.99, sounds as if it's calculated to the penny to be the lowest price possible.
In Canada, they’ve abolished the 1¢ coin, so C$9.99 is literally the same as C$10 – but charm pricing is still the norm nevertheless.
Conversely, in the UK, the Official Monster Raving Loony Party has proposed the creation of a 99p coin 'to save change'.
Many people believe that 99-pricing was introduced so that the shop employee had to open the till to get the change out, thus making it harder to simply pocket the money, but no evidence for this origin has been found.
The great exception to charm pricing is in prestige goods: a luxury handbag costs £900, not £899.99, because you don't want it to sound affordable - that's the point.
Your brain can be tricked into thinking the price is lower if the price is written on the bottom left of the price tag, because we subconsciously conceptualise numbers as getting bigger from left to right and from down to up.
Many retailers remove the commas: ‘£1999’ seems smaller than ‘£1,999’.
Anchor pricing is a price quoted purely to create a false reference point: you never intended anyone to buy the £900 TV – it’s only there to make the £600 one look like a bargain.
A penny saved is a penny to squander.
Price is what you pay. Value is what you get.
There's a placebo effect in pricing. The 2008 Ig Nobel Prize in Medicine was awarded for ‘demonstrating that high-priced fake medicine is more effective than low-priced fake medicine’.
The Aalsmeer Flower Auction in the town of Alsmeer near Amsterdam in The Netherlands is the largest flower auction in the world and takes place in the biggest building (by footprint) in the world. More than 40 million flowers from all over the world are sold their daily. Bidders get only a few seconds to bid on the flowers before they are sold. It is a Dutch auction so the price goes from high to low.
A huge clock is displayed showing the asking price, it is gradually reduced until a bidder is found, a process known as 'clocking'. Putting up too high a starting price will be greeted by a rousing chorus of the rollicking Dutch song:
Wie zat dat betaten,
Wie heeft er zoveel geld?
(Who's gonna pay that,
Who's got that much cash?)
In the US it’s common to have a ‘take a penny, leave a penny’ tray on the shop counter, to simplify transactions.
Aalsmeer means 'Lake of Eels' in Dutch.
The price the tooth fairy pays for a tooth went up by 42% between 2011 and 2013.
Customers paying more at a restaurant perceive the food as tastier than the same food offered at a lower price.
In AD 301, the price of beer in Britain was 4 denarii a pint, twice as much as it was in Egypt.
Shakespeare's signature is valued somewhere around a million dollars.
In 1776, one pound of Fry's famous chocolate retailed at 7/6, a sum just 5d below the average agricultural labourer's weekly wage.
Riots in England in the mid 18th century were invariably about the price of food and more often than not were started by women.
A new US study shows a $10,000 rise in house prices leads to a 5% increase in fertility rates in home owners and a 2.4% decrease in renters.