In a 2005 study by researchers from New York University, investigators found that ending prices in “.99,” had an incredible impact, which they call the “left-digit effect in price cognition.” “Nine-ending prices will be perceived to be smaller than a price one cent higher,” they wrote. They explain that, because we read from left to right, the first digit in a price resonates with us the most. Unconsciously, our brains perceive $2.99 to be closer to $2 than to $3. Additionally, they added, ending a price in “.99” makes us think that the item is on sale, even if it’s not.
The power of “.99” pricing was demonstrated in a groundbreaking study conducted by professors from the University of Chicago and MIT. Researchers took a piece of women’s clothing and assigned it different prices: $34, $39.99, and $44. Astonishingly, the garment was most popular at $39.99 even though it was six dollars more expensive than the cheapest option!
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