Dollars & Cents

Have you ever wondered why goods are always sold at $49.99(not $50) or $999 (Not $1000) ? Perhaps the easiest explanation is the psychological fact that the consumer's mind thinks that $49.99 is less than $50 (Though in strict quantitative sense the difference is immaterial).

I was reading an article about this in New York Times and found some interesting comments by Readers on the evolution of this strategy.Read it. Its very Interesting.Here are those comments from NYT :

* "I believe that the origin of 99-cent pricing goes back to JC Penny to keep his employees honest." (Various other readers cited Mr. Macy, Mr. Woolworth and Mr. Sears.) "At 99 cents, they would be forced to open the cash register to give change. When the price was an even dollar, employees would be more tempted simply to pocket the bill."

* "I believe you can trace the origin of these sales to William Randolph Hearst. In the days when one cent would buy something concrete in a store, newspapers sold for amounts like 3 cents. Hearst encouraged advertisements from the major department stores, and told his staff to push the concept of prices at odd amounts in order to ensure that there was a good circulation of small change so that the public would be able to buy his papers."

Of course the other Scam is that in some countries (Like US - Perhaps because of varying taxes in different states) its not inclusive of Sales Tax and hence understates the actual price one pays.However in UK,Singapore the Sales tax is included in such prices.