Retailers have long believed that usually they'll sell a bit more of something priced at say $2.99 than $3, or $9.99 than $10. Studies by psychologists and economists confirm that they are right.

Why it works is not so clear, but the theories tend to revolve around the following points:

- We scan left to right, and the first digit strongly influences our subjective impression of the price.

- It might not even be too rational too worry about the pennies as long as you know the ballpark price. As long as it's "about $13" you decide it's in your desired price range and then you worry about what features it has, not how many cents above $13 it is.

- People tend to have mental cut-off points where for example they consider over $10 or $5 or $100 to be a lot for a certain type of product. So if they see a price that goes over that threshold they immediately exclude it from further consideration.

Remeber it's not like we all have to stupidly think $9.99 is much better value than $10 all of the time. It's just that some of the time, some people are influenced in whether they take a closer look at the product or not.

Some reading on the subject:

"Why 99-cent pricing fools us at the store"

http://www.miamiherald.com/103/v-fullstory/story/960874.html

"The Widespread Use of Odd Pricing in the Retail Sector":

http://marketing-bulletin.massey.ac.nz/V8/MB_V8_N1_Holdershaw.pdf

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