Why do they sell at odd prices like 599 instead of 600?

Because you see the 5 and think it’s 5-something, when it’s in fact 6. If someone asked you how much your T-shirt cost, you might remember it was around 19$, when in fact it was 20 (19.99)

What Jack79 said. In a retail marketing class, the told us that research supports that people perceive $5.99 as lower priced than $6.00.

A lot of people also have cut off points when it comes to prices. For instance, $20 is the cut off point for me when I’m considering something. If it’s something I really want AND it’s under $20, I’ll definitely buy it. But if it’s right at that $20 mark or higher, I start pondering—do I really want this?

Also, it’s easier to tell the spouse, I got us a brand new TV for under $200! (When it’s really $199.)

@Elle: For buying anything?!

It’s a mental trick to get more sales. It’s like saying one week as opposed to SEVEN DAYS, or one month to thirty days.

As the others have noted, it’s a marketing/advertising ploy. If used cleverly, it can produce greater expectations than the reality of the situation. For example, when one hears “our entire inventory is under $1000 a unit”, you may think they have inventory covering the entire price range from $1 to $999, when in reality their entire inventory is $999, except for the one only advertised special that was already promised to cousin Vinny long before the ad was handed to the printer or newspaper, or posted on the net.

If you pay 599, include tax it’s a little more than 600, bank will charge you at a integral number, and refund the part you’ve over-paid.

It’s all psychology. Our human minds are tricked when we see such digits, we do not conceptualize $599 as equaling $600. Additionally, everyone wants a deal, and we feel that $599.99 is somehow a bargain compared to $600. And as mentioned above, if you had a budget of $20 and saw something on sale for $20 you may choose not to buy it, but could be persuaded to buy it if it were marked as $19.99 (even though both will have taxes applied).

Personally, I prefer honesty, and would appreciate having not only whole numbers, but after tax prices on shelf tags. I make do with the unit per price breakdown (such as cents per ml on cans of tomato sauce).

Marketing is primarily psychology based. There is literally tons of research regarding it, as many companies do revolve around getting as much money as possible. If Coca-Cola can entice you into buying one more can of their coke by putting shiny large dripping ice cubes on the images around the machine, then you bet they are going to do so. They spend tons of money finding things like this out, doing market research, test groups, etc, to fully milk any chances of you buying their product. I’m sure there are tons of books written by folks who’ve investigated such things, such as the book “Fast Food Nation” by Eric Schlosser (focuses more on the general fast food industry, but contains lots of great info).

I think it’s also got something to do with getting change back. I get the same drink from the same place every week, and they jacked up the price from $1.90 to $2.00 recently. I miss getting change! There’s an intrinsic misery in handing over a crisp bill and knowing that’s the last you’ll see of your cash [in exchange for an awesome drink, of course]. I’ve gotten five cents back with a long receipt and a smile and still felt like I was getting the best out of the situation.

Stupid? Sure. But half the stuff on the market depends on our being a little insensible.

what’s $7.99×2? Around $14, right? Cause $7×2 is $14, right? <—that’s why target does that. Buy, Buy, Buy!!! Of course, if it’s Walmart then it’s $7.97. They like the 7s at the end of the price.

That kind of price tricks our evolutionarily developed “approximative evaluation” mechanism into thinking that the item is cheaper than the round-number price by a lot more than it acually is, because we pay the most attention to, and put the greatest evaluative weight on, the first digit.

It’s the same kind of trick as: .25 cents each, or 4 for a dollar. Some people don’t do the math and think they are getting a deal. 5 for a dollar would be a deal, three for a buck, not so much. =)

Don’t quote me on this, but I heard it was to keep the penny in circulation . . . cuz if you pay $7 for something that’s $6.99, you get a penny back. But then that wouldn’t make much sense once you add tax . . .

its all psychological, the “599” is aesthetically more pleasing to your eye, all while making you feel like you are paying less than “600” when really youre not.

Well I think there are several reasons. $9.99 to most people seems cheaper than $10.00. Impulse buyers are more likely to purchase something at $9.99 rather than $10.00. Back in the 1920’s prices were typically rounded to the nearest $0.05. Eventually competitors realized they could leverage their product by making it $9.99 rather than $10.00. With respect to home prices and online stores they do it because you can limit your search criteria. For example if you want to price your home at $1,000,000 many realtors will tell you to go to $999,999 because when people search on the internet they can filter those out equal to or above $1,000,000.

It’s an optical illusion.

i always make a point of giving props to those who don’t engage in this stupidity

5 < 6, even when only by a penny. Marketing + psychology = win.

5 < 6, even when only by a penny. Marketing + psychology + unthinking drones = win.

—@girlofscience As a college student, $20 is my personal cut off point. Lol.—

Anywho, the good thing about $19.99 is that it gets all the price-sensitive people to buy your product who might not have done so if it were at $20, buuuut, for the retailers, $.01 per unit (regardless of how many units) doesn’t really kick their profits in the shins.

seriously, what kind of an idiot will buy something at $xx.99, but not $xx.00?! that’s just crazy.

@archer Because putting it a “dollar value” down makes it look a lot cheaper. Marketing trick. Instead of “Only $20.00! It’s “Only $19.00!” (19.99)

@archer You have to understand psychology and trickery dude.

@archer ever look at gas prices? They are marked at, for example, $2.59 point 9 a gallon. You are saving one-tenth of a cent per gallon.

it makes you feel like you’re getting a deal. even though most people, logically, know that 6 bucks is only a penny over $5.99, just seeing that ‘5’ instead of a ‘6’ makes you feel better about buying it. especially when it’s something like, “was $7.00, but now it’s $5.99!”. you know it isn’t, but it makes you feel like you’re getting an extra dollar off.

I agree with the comments above about the psychology.

Also, in retail, many stores use .00 prices for full retail and .99 prices for markdowns. This is just an easy way for people working at the store to know if it is a sale item. Sometimes they use an additional “cents” for specially priced goods, like .98. These items might be brought in at a “special price” that is considered by the retailer to be lower than typical retail for that item, but is not a markdown, it is the actual starting price for the customer.

@JLeslie : ah, excellent, a concept i was unfamiliar with. i love to learn things.

regards, “Lex”—Knowledge Junkie

@LexWordsmith You’re welcome.

Another thing to think about…in real estate prices like $699K are you used frequently, but searches in the MLS are usually narrowed down by price range $650K-$700. So if the range is $700—$750 your property at $699K will not come up. If your price is $700K on the button you will come up in both searches. You rarely see this done though.

good grief, the fact that it’s a psychological trick is obvious. amazing how many times the obvious has been restated here.

my point is that only the unaware, unthinking person is susceptible to these tricks, and that i express my respect for those who respect me by not engaging in transparent gimmickry.

It’s a real effort to be aware and thinking all the time, especially when you have to keep your nerves jangled to remain on the alert against powerful evolved adaptations. The ability to sort out significant information and make useful approximations on a subconscious level was a significant survival mechanism, because it led to action much more quickly than did laboriously reasoning through to actions on a conscious level—if the approximation was good enough, your speeed of action gave you a big survival advantage. So that kind of rule-of-thumb subconscious decision mechanism became deeply ingrained and therefore difficult to counter. Now, within the space of a few generations, we’re in a very different situation, where those evolved reflexes don’t produce as good an answer as does the more accurate conscious reasoning, but it’s still very difficult for us not to automatically employ the mechanisms that by now are nearly innate and instinctive in humans.