Do you know why stores started charging $19.99 for something instead of an even $20? It wasn’t because people perceive it as being cheaper. Although that IS true, that was just a bonus psychological effect. The REAL reason stores changed their pricing was to stop employee theft! It started in the 1800's and it forced sales people to ring up purchases on a register, and give customers change, instead of just pocketing the cash. Well, these days, store pricing is a science. And retailers use psychological tricks to get us to spend more. For example:

  • No matter how expensive an item is, if the price ends in 99 cents, people think they’re getting a discount. But prices ending in zero – like an even ten dollars - make an item seem like it’s higher quality. And that’s true whether you’re buying a shirt, ordering at a restaurant, or even buying house!

  • Another pricing tactic: Putting something cheap next to something more expensive. Furniture stores do this. They’ll put a cheap-looking sofa next to one that’s obviously nicer and higher priced. The cheap one looks so bad in comparison, that people will often buy the nicer couch. But here’s an added bonus – because the customer SAW the cheap sofa, they’ll still think the store offers good prices. 

  • One last pricing trick? The bundle. 5 lemons for a dollar sounds great! But we’re not really getting a discount if a single lemon costs 20 cents on its own. The bundle isn’t any cheaper, but we think it is and end up spending more than necessary. So always check the unit price before buying a bundle of anything.