6. Which price sells better? 19.99, 19.37 or 19.50?

In the previous lesson, we explained that lowering a price so the first digit on the left drops (e.g. from 20 to 19) makes customers subconsciously group it with lower-priced items. But is there an optimal price ending that leads to the highest sales?

Generally, prices ending in .99 are considered the most attractive. You can observe this pattern in nearly every store. A 1997 study^[1] showed that over 60% of prices ended with the digit “9.” The second most common was “5” (28.6%), followed by “0” (7.5%). Other digits appeared in fewer than 1% of cases.

The popularity of “9” is so strong that retailers even artificially add it to prices. A good example is gas prices in the US, where a gallon is typically listed as $2.199 — even though this fractional denomination doesn’t really exist.

Does this mean “9” is always the best option? While no scientific studies have proven this definitively^[2], there are two main arguments supporting it:

– Financial – a 0.99 ending allows for a higher margin while keeping the price within the same psychological tier;

– Psychological – over the years, consumers have learned to associate .99 endings with deals and discounts^[3]. This makes it an effective signal of value.

On the other hand, you can use the ubiquity of .99 pricing to your advantage by surprising customers with an unusual ending (e.g. 9.87 PLN), which may draw attention to your product. Such “uneven” pricing also suggests that the price is cost-based rather than rounded for marketing purposes.

In summary, there’s no hard evidence that different decimal digits affect price perception directly. However, you can leverage consumer habits by using .99 to imply a deal and improve margins.

Alternatively, using an uncommon ending can help your product stand out without negatively impacting sales — and might even increase attention.

 ^[1] Holdershaw, Gendall & Garland, 1997, “The Widespread Use Of Odd Pricing In The Retail Sector”
^[2] Simon H., 2015, “Pricing Man”
^[3] Gabor & Granger, 1964, “Price Sensitivity of the Consumer”