Why a Price Ending in ‘99’ Doesn’t Mean You’re Getting a Deal
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Here's your money briefing for Monday, November 28th. I'm J.R. Whelan for The Wall Street Journal. It's Cyber Monday, and whether you're doing your holiday shopping, scrolling online, or braving crowded stores and malls, you're likely to come across prices ending in 99. And that's no accident.
People are pricing things for a lot of different reasons. They're trying to get your attention. You know, they're trying to promote a sale or whatever. But the effect that ends up being the most significant is that whenever retailers raise a price, they're much more likely to put it in a 99 cent ending to soften the blow.
So what do prices ending in 99 tell you about the value you're getting for your dollar? Probably more than you think. Josh Zombrun writes the numbers column for the WSJ. We'll talk with him about it after the break.
This podcast is brought to you by ReliaQuest. Cyber criminals are constantly attacking. They want your data. They want your identity. They want your innovation. ReliaQuest fortifies your business with agentic defense, AI that detects, contains, and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now and delivers insights to help them predict what's next.
What is this episode's focus on prices ending in ‘99’ and when was it recorded?
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You see it everywhere you shop. The number nine. Prices mark $9.99 or $39.99 or $3.99. It's all part of a strategy to get you in the store and spend, but does it mean you're getting a deal? Even if you think you've got it figured out, there may be even more going on than you realize. WSJ Markets columnist Josh Zumbren has been looking into it, and he joins us with more. Josh, thank you very much for being with us.
Thanks so much for having me.
So Josh, everybody pretty much has a general sense as to why 99 is on the end of prices, but what's the common wisdom behind it?
Well, I mean, there's two things that are going on here. One is that people just kind of read numbers left to right. And so even though it's such an obvious trick, people really do fall for it. They kind of look at a price like $9.99 and they kind of see that and interpret that as nine something rather than $10. It's the same as it's a penny different than $10. And they're kind of more willing to pay that price. And there's been tons of research over the years that backs up the fact that this is actually a very effective technique and that people fall for it. The other piece of it is that people have come to associate that 99 cent ending with sales. You see it all the time in commercials or the advertising inserts that you get in the newspaper and stuff like that.
Everything is $1.99, $5.99, $10.99, $8.99. Everything is a 99 cent ending. Gas stations, obviously, another example where everything ends in 99.9. It's because people fall for it that it's still so common. There's actually a name for this. I mean, people who study pricing, businesses have entire divisions or they'll have whole teams that are working on pricing strategy. And so, of course, there's a term for it. It's often called just below pricing because $9.99 is just below $10. Or they also call it psychological pricing because it's kind of a psychological trick. Or charm pricing is another common term in the industry for this practice.
But there's a lot more going on here. And you've tracked quite a bit of research that's been done on this topic. First of all, how do retailers work these 99 prices into the equation when they raise prices?
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