prices are often expressed as odd prices: a little less than a round number, e.g. ~ $19.99 or £6.95. ~ Psychological pricing is a theory in marketing that these prices have a psychological impact that drives demand greater than would be expected if consumers were perfectly rational. ~ Psychological pricing is one cause of price points.According to a 1997 study published in the Marketing Bulletin, approximately 60% of prices in advertising material ended in the digit 9, 30% ended in the digit 5, 7% ended in the digit 0 and the remaining seven digits combined accounted for only slightly over 3% of prices evaluated.
In a traditional cash transaction, fractional pricing imposes intangible costs on the vendor (printing fractional prices), the cashier (producing awkward change) and the customer (stowing the change). ~ These factors have become less relevant with the increased use of checks, credit and debit cards and other forms of currency-free exchange.
The psychological pricing theory is based on one or more of the following hypotheses:
