Does .99 cent pricing really work? Wouldn’t it be easier to round everything to the nearest dollar?
The answer to both those questions is a resounding “yes.” Although it would be easier to round up, stores use so-called psychological pricing because it demonstrably boosts sales by 8%, according to one study of 60,000 mail-order catalogs.
In short, the 30,000 customers that received rounded up pricing spent 8% less than the 30,000 catalog recipients of 99 cent pricing. (Note: The two catalogs were identical except for pricing.)
Granted, this study was performed 20 years ago. But with those kind of gains, the trend is sure to stick around for a long time.