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The One Cent Problem PDF Print E-mail
Swift
Written by Jeff Wagg   

At the JREF, we have a few things in a shop online. No, this article isn't a plug for our store. Instead, I'd like to foster comment on an issue that I've found major disagreement on in the skeptical community. And that is: is it ethical to charge $99.99 for something?

At first glance, the answer is yes. You can charge whatever you want for your products. But consider the impact of $99.99 versus the $100.00. Even though there's a difference of only one cent, or 1/10,000th of the original price, studies show that more people will buy at $99.99 than at $100.00. The second figure seems much bigger.

For gasoline in the US, this manipulation is carried to the impossible level of 10ths of a cent. I paid $1.799 for a gallon of gas today, which rang up as $1.80 as it's impossible to pay fractions of cents in this country and the amount is rounded up. The 9/10ths of a cent is there only to make the price look lower than it actually is.

Given that the 1¢ is probably not the breaking point in a financial decision, what is? It seems obvious that it's psychology, and that people aren't really thinking about the price so much as having emotion about it.

If we accept all the above as fact, the question remains: is it ethical to manipulate your shoppers into purchasing products based on an emotional response to a price that looks lower than it actually is? I've heard two arguments:

1) Yes, caveat emptor rules the day, and as long as you're not outright lying to your customers, you're free to do as you like. In fact, this is how most business seems to run today. You can say that your product has fewer calories than the competitor, and leave out the fact that it's also a smaller serving size. It's up to the consumer to do his own research and determine the difference. Also, these days, people expect to see .99 suffixes (or even .87 at Wal•Mart) and seeing a price of $100 looks artificial and non-discounted.

2) No. If you want to charge $100 for your product, do so. Expose the integrity of your company by respecting your customers enough to give them full disclosure. You've made or procured a product, you've set a price, and so be it.

We've encountered this dilemma at the JREF. We know that we'll sell more if we use a .99 suffix, but it just doesn't seem right. We price our products at what we think they're worth, and that type of calculation doesn't involve cents. If you see cents on the price, you can surmise the reason they're there is to slightly manipulate you into purchasing the item. This is against the principals of critical thinking.

So there's the dilemma. I find both arguments compelling, which leads me to you. What do you think? Please leave a comment, and if you're a retailer, please let us know that as well. Thank you.

 

 

 

 

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written by daveg703, February 19, 2009
I'm agin' it! (decimal sillines, that is) I had a supplier that listed all his prices in even dollars, and I loved it! In my retail store I did the same. Unfortunately, the sales tax makes a mess of a nice system, and we have to live with it. As for the emotional aspect, my attitude and my services brought in the customers, so I never worried about whether the competition used the 9x cents gimmick to lure people away.

I currently have a rubbish hauler that has to bill me for their service, plus an assortment of local taxes that always make the total a few cents shy of $25 per month. After the first bill, I sent back a check for even dollars, and instructed them to round that up some way, and never send me another bill for $24.96. They were happy to comply, and I consider those four cents an excellent investment in stress avoidance.

I never write checks for utility bills that end in cents. I simply round up to the nearest FIVE dollars every time. (and get a small credit every time.) This simplifies check writing, check register entries, balancing the checkbook- and the utility computers don't give a darn. smilies/grin.gif
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written by MadScientist, February 19, 2009
I never could understand that 99.999 stuff - I always look at the price and think '100' so the .99 marketing has 0.0000000001 effect on me. I guess some people would be silly enough to think if they buy the right things they'll end up with XXX.X2 or XXX.X7 and the cash register will round that down and they save a whopping $0.02! Or maybe they figure after they've bought 80 items for an average of $1.50 each they've saved a full $0.80. Wow. All that hard work to 'save' a penny must really be worth it. Just don't buy anything by weight like some fruits or meat - that just screws up your shopping unless you buy them first and tune the rest of your $0.99 shopping. Given the cost of minting a penny and the fact that the penny isn't as useful or interesting as it was in 1980, I think it's time for the penny to join the dinosaurs.
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written by Rogue Medic, February 19, 2009
The tenths of a cent is not rounded up, if you end up buying gas in multiples of 10 gallons. The 1/10 of a penny will add up, over ten gallons, to a whole penny. Whoopie! smilies/grin.gif

I prefer the second choice. On the other hand, you may be putting yourself at a competitive disadvantage, by not taking off that penny. Are you comfortable with the ways you put lipstick on a pig. The pig being the price, not the product.

I round everything up, in my head. I add in the relevant taxes, shipping, and other extra charges. It is simple math.

The problem with such marketing is when the customer is not aware of the difference. If you are aware of an illusion, it loses its ability to mislead you. It is only when you are not aware of it, ignore it, forget about it, . . . . , that it becomes a factor.
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written by dmast, February 19, 2009
Maybe 100.00 looks much bigger than 99.99, because it has one digit more. But what about 40.00 vs 39.99? I think that with all these nines, the number 39.99 looks bigger.
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written by advancedGIR, February 19, 2009
It's also common in France (the difference is that the displayed price always include VAT and service, except when obviously proposed to corporate buyers), except that there is also a non-included "eco-participation" of a few cent on several products (mostly electronics and home appliance) that participates in the recycling of the old equipment that is supposed to be replaced so you actually end up paying 300E24 for the 299E99 TV.

Also, I could get my video games at 59E99 in my supermarket, but the small shop in from of it sells them for 60E and gives me a 10E gift card for every 500E spent there (plus, they're very pleasant people).

One thing that's very different between USA and France is that you'll only get about 1.5L of gas with your 1.8$.
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My 99 cents worth (special price!)
written by Mikebo, February 19, 2009
Yeah, even as a young kid, I couldn't understand why shops displayed prices ending in 19/11 (that's 19 shillings 11 pence - before the UK switched to decimal currency, now they're like £x.99 etc).

It actually annoyed me, 'cause I realised it was just a gimmick.

Even more annoying, in this respect, is when they advertise something as "less than" a certain price when the difference is just a penny or, on more expensive items, just a pound.

I know in the US (I've been to Florida a few times, though not, so far, this century) you have dollar stores, where each item is priced at a dollar. Here in the UK we, similarly, have pound shops. But I've also seen a 99 pence shop! Do you guys have 99 cent stores?

At least here, the displayed price includes tax (VAT): in the States, when you get to the checkout you'll find the price is a bit more than you thought because sales tax has to be added on. Isn't that another bit of a psychological cheat?
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written by advancedGIR, February 19, 2009
One slightly offtipic about your store: from the description I read, I couldn't always determine if the book was a fiction novel or an essay.

Anyway, concerning .99 price ending, all I can say is that when buying from an american vendor, between the currency change, PayPal commission and customs fees, I only have a very approximative idea of the price I will actually pay.
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written by José, February 19, 2009
I have a bigger problem with “You must order now” and “a strict limit of 5 per household.”

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No cents!
written by Valis667, February 19, 2009
In my country (South Africa) the one and two cent coins have been taken out of circulation. However, that hasn't stopped shops from displaying prices as xx.99. When paying at the till the total is rounded down to the nearest five cents. Although in Zimbabwe, our neighbour to the north, prices are rounded to the nearest trillion dollars, lol!
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Let them suffer!
written by hugo, February 20, 2009
Let me tell you an anecdote: how to let those 99 Center offerers suffer.

In Munich central station I ordered a 99 Cent burger at a famous fast food "restaurant" and paid with 1 €. Instead of giving me my change the poor guy continued serving one of the 5 hungry persons waiting behind me.

Of course, I had to interrupt his business and ask for my change. His only excuse was that had no more 1 Cent coins. Who would accept that?! :p

Truthfully, I told him that I only owned a 1 € coin and a couple of 50 Cent coins. And I certainly was not going away -- as he repeatedly told me -- without my change. I had plenty of time waiting for my train.

He finally called the store manager. The story ended with an angry store manager, an even larger crowd of waiting people, and me getting a 99 Cent burger for just 50 Cents.

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written by Valis667, February 20, 2009
...and me getting a 99 Cent burger for just 50 Cents.


You should've bought two, lol!
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written by shanek, February 20, 2009
As much as I might personally prefer the second (I like stores like Dollar General that just put $5 or whatever on the product), how would you enforce it? And essentially, you'd be forcing the store to charge people an extra cent--what sense does that make?
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written by fission235, February 20, 2009
I've had this debate before on a similar topic. My example was the morality of using gorgeous models in Victoria's Secret magazines in order to sell clothes/swimsuits. Since the technique is obviously more effective than putting obese people in swimsuits for display, then there must be some type of psychological manipulation going on. It's hard to say whether it's ethical or not, but it sure seems wrong.
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False assumption
written by hopfen, February 20, 2009
Jeff, your assumption that gasoline prices are rounded up to account for tenths of a cent is simply incorrect.
The display on the meter just isn't that precise, so it's just as possible to have it rounded down as up. You're paying to the nearest cent, that's all.

On the larger issue, what's the harm in increasing sales by offering what seems to be a more attractive price? The more intelligent consumers are checking and comparing prices anyway, so they're not as likely to be sucked in by the psychological maneuver. This is simply good business practice, IMHO.
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written by bosshog, February 20, 2009
A bit of history first:
The practice of pricing things in less than whole dollars was purportedly started in Chicago where the newspapers at the time sold for a few pennies; the owner wanted more loose change in people's pockets to "stimulate" newspaper purchasing so convinced his advertisers to price in this way.

The question as I understand it dealt with the ethics of the matter and not the convenience. Of course it is ethical to price things this way or rather, it is not UN-ethical. True, there is a certain psychological aspect to such pricing but it is not in any way dishonest or deceitful. We might as well ask if it is "ethical" for a woman to wear lipstick and perfume or for a man to trim his beard.
I find it disturbing that this question is even being posed on this site; it seems to be predicated on a common (and growing) assumption that the Great Unwashed are so weak-minded, so abjectly slavish to their emotions, so utterly unable to decide for themselves what is and isn't so, so vulnerable to exploitation by sinister money interests that they must be shielded and buffered by a more wise and knowing protector (government). If we are collectively so dunderheaded that we can't "feel" the difference between $49.99 and $50.00 then the jig is up for humanity and natural selection should run its course.
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written by SionH, February 20, 2009
There is a valid business reason for the $19.99, etc, pricing of goods. It helps prevent staff theft by forcing transactions through the register. If a customer is waiting for their penny change then it is more difficult (though obviously not impossible) for the sales clerk to simply pocket the money.
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written by Thanny, February 20, 2009
The story I've always heard to explain how x.99 prices came about concerns honesty at the till. If the price was an even dollar amount, the clerk could pocket the money and later claim something was stolen. If he had to give change, then the loud cash register would let the owner in the back know that money was changing hands.

I don't know if it's actually true, but it certainly rings that way.

In any case, the JREF is a non-profit organization. I'm skeptical about whether or not x.99 prices would actually increase sales, but if they did, it would merely amount to better funding for a worthy organization. You aren't selling bare necessities to destitute people. Your market is composed of people willing to part with money for a good cause, who find it easier to do so when it's treated as a purchase, rather than a straight donation. If decrementing the intitial digit of the price induces them to buy more, so much the better for the JREF and the conscience of the charity-minded consumer.
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written by jensfiederer, February 20, 2009
Not a matter of ethics at all, in my books.

If you are unduly influenced by pennies in pricing, educate yourself.

However, I MUCH prefer even pricing. $100 is more attractive to me than $99.99, and similarly to MadScientist I say to myself "$100.00!" when I see "$99.99". But if it was bought for amusement, to my wife I'll say "90-odd dollars".
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written by LovleAnjel, February 20, 2009
As a consumer, it makes no difference to me. I end up having to do math anyway to figure out the price per unit (with clothes, the unit is how many times I can see myself wearing something) with tax, shipping, ect. and that pretty much removes the extra penny from consideration.

As a seller on ebay, I always list things at the lowest allowed price, $.99, to encourage bidding.
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written by Trez, February 20, 2009
If it makes you feel any better, I just filled up this morning too, but here in the UK, a gallon of regular unleaded costs about $3.41. Don't think that the 0.001 wouldve helped a great deal anyway
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written by Dungheap The Ugly, February 20, 2009
I claim that manipulative marketing, under whatever guise, is unethical. Most of the claims so far that it is ethical seem to boil down to one of three things:

1. You will be at a competitive disadvantage if you don't, so it's ethical.
2. Those that can be manipulated, deserve to be manipulated
3. The JREF is a good organization, so increasing sales is always ethical (i.e. the ends justify the means).

If number one is valid, then ethical considerations amount to not being the first to do it; selling diluted milk adulterated with melamine is ethical because the competition does it. The difference here is one of degree rather than substance. If number two is valid, then homeopathy and faith healing are both ethical. That seems a difficult stance for the JREF to take. If number three is valid, then just cut to the chase and create a front company that sells ear candles and colloidal silver. Use the money to educate previous customers.

In my opinion, the JREF should price in round amounts and include a prominent link with an explanation of the JREF's pricing.
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Both Pricing Methods are Dishonest
written by GusGus, February 20, 2009

It seems to me that a retailer should add a percentage markup of some sort (of course, there must be a profit) to the wholesale price to establish the retail price. As an example, if the markup is established at 44% and the wholesale price is 1.33 a unit, then the retail price should be 1.92, not 1.99 or 2.00. Proper retail prices, therefore, should run the gamut from x.00 through x.99. (Gasoline prices should run the gamut from x.000 through x.999.)
.
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written by hamradioguy, February 20, 2009
I've ALWAYS thought the 99 cents thing(or fractions thereof) silly, but anyone with at least a first grade education should be able to round up and figure out the real price. Silly, yes, and while it may not fool everyone it works and it's ethical, and the bottom line is to make sales.

There are all kinds of advertising tricks along this line: When I worked for a large mail order coin company we established a policy of free shipping. "Never a shipping or handling charge for your order." Now of course it didn't cost much to pull a coin out of a bin and stick it in an envelope, and naturally, the coin price was adjusted up to cover these costs...and then some, but it made for customer loyalty.

Likewise, take the situation at a local town where there are two competing hardware stores right next to one another: One is a big national chain store and the other one locally owned. The little local store often can't compete pricewise with the big one so their trick is to round DOWN a bit the price on most items. Their insect spray may be labeled $5.25 plus tax, but when they ring it up they charge you just $5 (nothing added for tax) give you a wink and a smile anda wish you a good day. Nevermind that the chain hardware store next door charges only $$4.59 for the same thing before tax.

All is fair in the ad business as long as you don't lie.
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written by shawnstover, February 20, 2009
If I'm not mistaken, there have been quite a few cognitive studies, and maybe some functional MRI studies, that have demonstrated synesthetic qualities of specific numbers. There may actually be an innate preference for the number 9. Individuals who experience a specific type of synesthesia tend to see and feel the number 9 as being rather impressive. One particular individual that I've read about, on his first trip to NYC, described being in the heart of the city with all its skyscrapers as being surrounded by 9s. It may be a stretch to assume that most people have a subconscious preference for 9s, but it's a possibility. Maybe the admen figured it out before the scientists did.
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Silliness of Pennies
written by StarTrekLivz, February 20, 2009
When I was in Australia some years ago, they had discontinued the penny and everything was rounded to 5 cents -- so they still had the nonsense of x.95.

I automatically round in my head, but that doesn't necessarily suppress the emotional response, I've succumbed to the illusion that $29.99 is appreciably less than $30.00, maybe because when scanning the price I fixate on the first digit in the string and not the entire string.

A couple of my favorite restaurants have changed their menus to show prices without pennies: a micro-brewed ale is $3.50 or $4.00, an appetiser may be $6.75, a lunch item is $8, a nice dinner item is $23. I appreciate the avoidance of the string of 999999. Of course, the local sales & luxury tax (on alcohol) messes things up, but at least one starts with easy calculations.
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Seeing the penny and not the pound
written by avillarrealpouw, February 20, 2009
There is a lot of price manipulation happening even months before somebody prices an item at 10.00 or 9.99, one that is not in plain sight and that, if translated to the price, is the difference between 30.00 and 9.99 or something like that.
If you look at the list of ingredients in your food, you will see that lots of corn syrup is used instead of the nutritious food that happens to produce a nice sensation in your mouth. Citric acid is used instead of whole oranges, "flavour of" good food is used instead of the real thing.
The race to market with a new product usually starts with the target price and ends with the decisions regarding the requirements of the customer. You do not give them the best product you can make, you give them the worst product you can convince them to buy.
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written by Random, February 20, 2009
Prices are really screwed up in the UK at the moment.

Prices are traditionally given including tax (except where business customers are expected, as they get the tax back) but the government just dropped that tax from 17.5% to 15%. It is due to go back up in a year or so. Of course it would be too costly to change all the prices, but in most shops they have automatic tills already programmed with the price before tax, so all they need to do is change the tax rate. Everything you buy here that attracts tax (books, childrens' clothes and most food are tax-free) actually costs about 2.1p less for every £1 than the ticket price. It is ridiculous.
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what isn't manipulation?
written by tkr5, February 20, 2009
1. With that definition, almost everything we do could be considered manipulation. Making things visually pleasing attracts people, so why isn't this website just text if it's the ideas that count. The cover of a book affects whether people buy it, how you dress affects whether people decide to hire you, etc. Those are all emotional, too. In fact, any pricing would be manipulation by that definition because it is typically picked to be the most that people won't think is too much. Manipulation doesn't have to mean getting you to do something that you didn't want to do.

2. So, obviously, not all manipulation is unethical, and your question is where to draw the line. The way I see it, manipulation can be deceptive, misleading, or neither. Playing with serving size is misleading because it is usually stated in small type on the back of a package, and it is there because they know people aren't likely to see it. Charging $19.99 for something is neither deceptive nor misleading. I don't get how you can say that $19.99 "looks lower than it really is". It looks like $19.99, just because people treat it different from $20 doesn't mean anything...it IS different from $20. Color makes a difference, timing makes a difference, the weather outside makes a difference, so what if a penny makes a difference? There is no comparison on ethicality.

3. Who says that one kind of thinking is "better" than another? Is there really a rational way to pick how much one is willing to spend for something without spending hours crunching numbers? In fact, there is research that more precise amounts make people consider the price more narrowly (e.g., debating whether you want to spend $19 or $20 instead of $10 or $20). That would make no change in rationality, yet leads to the same effect
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A simple solution...
written by FirstTimeCaller, February 20, 2009
Set the price at $99. Or even better $90.
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written by Alan3354, February 20, 2009
Years ago, Little Giant children's books sold for 25 cents. The company was failing. They changed the price to 29 cents, and sales improved dramatically.

Also, if you sell something for $0.10 each, 2 for $0.25, most people will by 2.
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In Defense of 99 cents
written by rich_illing@yahoo.com, February 20, 2009
Pricing at $10.00 is as arbitrary as pricing at $9.99. There is no logical reason a price should end in .00. From a purely economic standpoint pricing should be set at the profit maximizing level. If we had perfect knowledge, that price might be $9.56. Since we don't have perfect knowledge, we rationally rely on convention. And we do know that human purchase decisions are not rational. Therefore the rational price setter will take human irrationality into consideration and set the price with what knowledge she does have. It is a well established fact that the penny does matter in the purchase decision, therefore the rational price setter prices at $9.99.

JREF is a non-profit, and therefore should not be setting price at the profit maximizing level, but at the level that maximizes its non-economic goals. Some items should be given away free. Some should be subsidized. (Pay people to take them.) One of JREF's goals is to promote rationality. Perhaps JREF should price to simply cover its costs. This would result in the last two digits of its items being completely random. .00 would be as likely as .99 or .38

The 9/10s of a cent pricing of gasoline is a historic relic from the days when gasoline was very cheap compared to today's prices and the penny was not the smallest unit of US currency. It was completely rational to price at 9/10ths of a cent as many products were priced in fractions of a cent including US postage. The continued production of the penny and nickel (and I would also argue the dime) is not rational but don't get me started on the irrationality of our currency and the growing illegality of actually possessing cash.
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written by kodabar, February 20, 2009
Your dilemma is really very simple. You should charge whole dollar prices. After all, your customers are all sceptics who are above such petty chicanery. Aren't they?
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Ben Franklin probably would say that 9.99 is both rational and ethical
written by wysage, February 20, 2009
Ben Franklin wrote in Poor Richard's Almanac that a penny saved is a penny earned. Whereas a penny is not worth as much as it was back then, I still think of this saying when I see $9.99 instead of $10.00. Of course, I would rather have federal reserve notes with his picture on them than an equal number of pennies as a way of remembrance.
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written by shanek, February 20, 2009
I once heard a story, I have no idea if it's true, but it sounds like it could be:

A guy bought a new refrigerator. There was nothing wrong with the old one; he just wanted a bigger one. Money was no issue with him, so he figured he'd just give some lucky person a break and give the fridge away. He put it out in his yard, with a sign on it saying, "Free refrigerator--just come take it away!" It stayed there for a month without being touched. So then, he went out and changed the sign to read, "Refrigerator $50."

The next day someone stole it.
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written by Willy K, February 20, 2009
Excellent Psychology Jeff!

I didn't realize you had a store. I took a quick look just now, I'll look at it more thoroughly after I post this comment. smilies/grin.gif


P.S. I agree, the gas price fractions are the most annoying. smilies/tongue.gif
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written by LuigiNovi, February 20, 2009
In my opinion, if you want to argue that taking advantage of any and all psychological tactics when trying to sell something, even if you're a non-profit organization trying to do some genuine good, isn't right, and is against the principals of critical thinking, then you might as well argue that this holds true for any tactic in marketing, advertising and commerce designed to help maximize your business. Tactics that are more persuasive than others, in and of themselves, are not necessarily unethical unless they're dishonest, or portray the product falsely.
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written by BillyJoe, February 20, 2009
Petrol prices vary through the week down here, but they follow a cycle of gradually reaching a minimum on Wednesday evenings and gradually reaching a maximum on Saturday mornings.

I ignore the 9 and just read $1.40, $1.30 $1.20 $1.10, $1.20, $1 30, $1.40 to get a sense of whether it is Wednesday or not.

Yeah, that's right. I couldn't care less about the price, when I need petrol I need petrol.
But I hate friggin' Wednesdays! smilies/angry.gif

BJ
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Instant translation
written by fatewilleatyou, February 20, 2009
If I purchased "Death from the Skies" for $19.99 and was asked, "How much did it cost?" My response would be "Twenty dollars." I think this particular marketing scheme has been around long enough that it's instantly translated.

Also if you're selling something with a .99¢ suffix, and it's the tipping factor in a person's decision to purchase, then the difference of up to a 10% amount of deception is not much of a reason to lose moral sleep. You might say it's as dishonest to choose a pretty color for your book cover as it entices based on visual appeal and doesn't accurately depict the book's contents.
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Err, I don't think it matters
written by Alencon, February 20, 2009
The $.99 pricing has been a joke for as long as I can remember. I doubt too many people are really fooled. Consider it a form of advertising if you will but much more honest. At least you do really save a penny and you know the old saying about a penny saved don't you?

If this is the biggest ethical question you can find to write about, you must be living on a different planet than I am.
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Round numbers for me, please
written by TS, February 20, 2009
I prefer round numbers.

Also I just want to remind the UK person talking about fuel prices US Vs UK, that a US Gallon = 3.785411784 Litres and a UK Gallon = 4.54609 Litres. smilies/wink.gif
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written by Richard Dodd, February 21, 2009
I am posting my comment without having read any previous coments which may influence my thinking...
The question is one of ethics or morals, therefore critical thinking is irrelevant unless there is
a prevailing idea that a critical thinker must also be a moral person. I am saying there is no right or wrong.
A critical thinker seeks truth but is not bound by it. To put this obligaton of truth and integrity upon a
critical thinker implies that a set of universal standards should be adhered to which further implies a source
for those standards. What is this source or origin of definitive truth of what is right or wrong? It cannot be
of human origin since we differ greatly in matters of conscience,even in the case of a room full of critical thinkers.
In short, there is no right or wrong (no highway code on this matter) and one should be directed by conscience.
It is quite possible that Jeff Wagg and Randi disagree on he matter whilst being like minded critical thinkers.
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GOTCHA by the nines. GOTCHA without them too.
written by M♥REbr☺, February 21, 2009
Am I a part of this nonsense by discussing it and taking it seriously? UH OH! BUT: I fail to understand the “practice of making the nine the last digit of a sales price” as a serious issue. Or even as a reality. Two comments above gave two histories as the reason for the practice of making the nine the last digit of a sales price, each a different anti-theft history. [written by Thanny, February 20, 2009] & [written by SionH, February 20, 2009]. One comment, as a “purportedly” “bit of history”, gave advertised prices ending with a nine some how yielding loose change in peoples’ pockets some how being an inducement to buy said newspapers as a reason for the practice of making the nine the last digit of a sales price. [written by shawnstover, February 20, 2009] Three different histories!! I wonder at the “history”. I wonder at the “research”. 1) I know from eye witness experience that a sales clerk can 1a) NEVER FAIL to ring at the register, 1b) NEVER FAIL to give the customer back the exact and proper change, 1c) NEVER FAIL to give a proper and accurate receipt, 1d) NEVER FAIL to pocket money, 1e) NEVER FAIL to have a good cashier reconciliation each and every day, and 1f) NEVER get caught. 2) Honestly! I have known it to go on for years. Cash Register salesmen used the “clerk honesty” “issue” as an argument to sell the cash register way back then. The register has NOTHING to do with sales clerk honesty. The number “nine” has NOTHING to do with the use of a cash register. Further, nowadays, Money Registers are used for handling checks, money orders, credit cards, debits, and other things non-cash. And anyway, what does the “history” of the nine as the last digit of a sales price have to do with today's use? If everything in a store were priced 99 cents we could call it a 99 cent store or if everything were priced a dollar we could call it a dollar store but would anyone really believe the “real” value was 99 cents or would anyone really believe the “real” value was a dollar? The very existence of the dollar store itself goes counter to the “histories” of the practice of making the nine the last digit of a sales price. There was the old five-and-dime store chain where everything was five cents or ten cents and would anyone really believe the “real” value was either five cents or ten cents? That also goes counter to the “histories” of the practice of making the nine the last digit of a sales price. I remember a store chain that never advertised and never had special sales and didn’t have a nine as the last digit of the sales price. Everything was at an “everyday low price” and the chain actually depended on word of mouth to get customers and so it had no sales advertising costs and no price changing every week costs. It went out of business but that was not for lack of customers. That also goes counter to the “histories” of the practice of making the nine the last digit of a sales price. And not everything has a nine, nor has everything otherwise a five, as the last digit of its regular selling price. That also goes counter to the “histories” of the practice of making the nine the last digit of a sales price. The issue is maybe what you buy (e.g., brief vs boxer vs boxer brief vs thong) and why (less or more manly, less or more sexy, other, and etcetera). Is it really about the nine? If you in particular do not buy because of the “nine” in the price then isn’t there a niche for you? Won’t you buy anyway? Of course you will!! GOTCHA.
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written by jensfiederer, February 21, 2009
Here is an interesting item on the .99 history:

http://www.straightdope.com/columns/read/720/why-do-prices-end-in-99
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Wasn't this answered in one of Randi's recent videos?
written by Paul Erickson, February 21, 2009
As stated by Mr. Randi in one of his resent videos depicted on this site, "But is anyone fooled into celebrating the saving of one cent...?" If you truly "practice what you preach" the answer is obvious. There is always some excuse for not doing the right thing (see #1 argument in the article above). Look up the definition of "slippery slope".

Go to the 4:58 time on this video:

http://www.youtube.com/watch?v=o4ISmhwE1aY&feature=related
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written by jensfiederer, February 21, 2009
This video has little to do with "ethics", unless you believe the use of "you know" as a discourse marker http://linganth.blogspot.com/2...rkers.html is unethical, too.

You know, if Wagg replaced "unethical" with "really annoying" in his post, I would be 100% in the "really annoying" camp.
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Make a statement about deceptive marketing and round up.
written by Skeptigirl, February 21, 2009
As a specific statement on the practice of marketing techniques intended to deceive, I think it is in keeping with the spirit of the JREF to refuse to use this 'trick' of psychology, even if it is only minimally deceitful.

I also think the best impact of taking this stand is to point out you are taking it on the catalog page.
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funny
written by Skeptigirl, February 21, 2009
Go to the 4:58 time on this video:
I cracked up with this. At a glance I thought the comment was to change from $4.99 to $4.98. smilies/grin.gif
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PS, I'm a retailer.
written by Skeptigirl, February 21, 2009
I use round numbers for my fees because change for $22 means more hassle than change for $20 or $25. But I've never used 9s except for $90.
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written by Caller X, February 21, 2009
Sounds like someone is running low on ideas for articles. Perhaps Jeff should team up with Alison; between the two of them they could come up with, what? a couple kidneys? blood plasma? platelets?

Cents are here, get used to it. Just because we don't have a coin for the mil doesn't mean it isn't used. What about banker's rounding? A little more effort, please, Jeff.
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Hong Kong doesn't have this problem
written by Captain Al, February 21, 2009
This is why I love shopping in Hong Kong. Everything is rounded to some dollar. There is no $9.99 or $29.99. It would be $10.00 or $30.00 even. And since there is no sales tax, if something is $10 you just give the clerk a $10 note and you're finished. I doubt if Hong Kong consumers are any different than those "over here" so why do we have to put up with these hassles?
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the $99.99 option
written by mjr, February 21, 2009
So? Charge $90.
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written by Dan O., February 22, 2009
The use of 9's at the end of a price is the merchant's way of tricking consumers into thinking that they are getting a better price. If the merchant didn't believe that consumers would fall for this trick they wouldn't use it. Therefore, I am suspicious of merchants that have a disproportionate number of 9's trailing their prices. If the merchant is willing to openly engage in this form of trickery, what more are they doing that I haven't seen?
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Internet purchasing
written by medains, February 22, 2009
In these days of internet shops, I find that sub-pound (or dollar) pricing makes little difference for me since I know that there will be an added charge for delivery (and in some cases taxes too, depending on whether the price was inclusive or not).

The only time in which is does make a difference is when there is a trigger point for free delivery (eg. spend $20 or more and get free delivery) - then a $19.99 item is just annoying since it costs me more overall than a $20 one.

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written by SionH, February 23, 2009
@ M♥REbr☺

You seem, if I read your post correctly, to suggest that I am wrong in my argument that the 'penny less' pricing method has no security value. Having over 10 years experience in shop work in my youth, I have seen a couple of occasions where sales of rounded-number priced items have been handled outside the till and the money pocketed and the member of staff fired and arrested as a result. I'm not arguing that the system is foolproof, far from it, or that there is no psychological chicanery at work in pricing at £9.99 instead of £10.00. What I am saying is that there is a valid security argument to be made for the method of pricing, however limited it may be.
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written by Caller X, February 23, 2009

written by SionH, February 23, 2009
@ M♥REbr☺

You seem, if I read your post correctly, to suggest that I am wrong in my argument that the 'penny less' pricing method has no security value. Having over 10 years experience in shop work in my youth, I have seen a couple of occasions where sales of rounded-number priced items have been handled outside the till and the money pocketed and the member of staff fired and arrested as a result. I'm not arguing that the system is foolproof, far from it, or that there is no psychological chicanery at work in pricing at £9.99 instead of £10.00. What I am saying is that there is a valid security argument to be made for the method of pricing, however limited it may be.


Anyone who gets fired or arrested for stealing from their employer deserves to be culled from the herd. If you can't noodle that puzzle through, you're using up my oxygen. I supplemented my income for several years by stealing from my employer, typically $100 or so a week. Never caught, never fired, never arrested. If you have a business and can't figure out that your employees will steal from you, you deserve what you get.
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Fractional Fuel
written by horque, February 23, 2009
Surely in the case of fuel, it is at least partly about giving you less fuel for the same amount of cash.
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written by kevinquinnyo, February 23, 2009
I've always wished that stores in the U.S. would sell items for an amount that when sales tax is added, it amounts to a round dollar amount. If an item is to be priced at around $5 for a competitive profit, and sales tax in you state is .07%, it could be priced at $4.67 instead, that way when the tax is added it comes to exactly $5. (That's rounded up from the thousandths place)

I think the incentive for the store is added customer simplicity at the counter and with balancing their receipts and debit accounts, etc. This enjoyment from customers might offset the percentage of prices that you had to lower instead of raise to make it hit dead on a whole dollar amount.

Hope that wasn't too confusing..

-Kevin
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written by kevinquinnyo, February 23, 2009
whoops i meant 7%
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written by Bruno, February 24, 2009
What I'd really like to know is whether the 0.99 thing actually works, and if it isn't just one of those things people do because they believe it works.
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written by Soapy Sam, February 24, 2009

The ethical price should be whatever it is calculated to be, given reasonable profit after overheads. If that's $37.19, then that's what it should be. In that case, would anyone advocate rounding down to $39.00? Don't think so.
I can't see this as a big issue on a website of this kind though: If I want a mug for under £6.99 I can find one without going to the JREF store.

Oh- and this ain't a matter of principal. It ain't really even a matter of principle. It's a business decision. Why not go for wierd penny totals that vary a penny or three from day to day, just to make it all a bit more entertaining?
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written by pxatkins, February 24, 2009
Three things. First, I can't believe the number of replies to this post; much ado etc.

Second, 99 cents is actually less than $1, for real, test it.

Third, if you're worried about ethics of your sales going up by pricing at $x.99 and down for $x.00 you should not be in charge of sales. smilies/wink.gif
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written by Caller X, February 24, 2009
written by Soapy Sam, February 24, 2009
The ethical price should be whatever it is calculated to be, given reasonable profit after overheads. If that's $37.19, then that's what it should be. In that case, would anyone advocate rounding down to $39.00? Don't think so.


The ethical price is whatever the two parties agree to. The only reasonable profit is infinity, but in the real world you settle for less. (Socialist much?)

And why in the world would anyone round $37.19 DOWN to $39.00?
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written by BillyJoe, February 24, 2009
You're lucky, I didn't understand any of his post.
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written by Steel Rat, February 26, 2009
I don't think ethics has anything to do with it. I just think it's silly to say xx.95 or xx.99. I don't do it in my business.
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written by BillyJoe, February 26, 2009
It's stupid of it doesn't increase your income as a result of extra sales more than covering the loss from reducing the price to XX.99.
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