The History of 9 and 99 price endings

Here’s a little bit of the history behind the 99 pricing. It would be interesting for you to know that the origins of the 99 pricing were not in marketing or psychology.

In the early 1900s, when cash registers were introduced in stores, the store owners started charging $0.99 instead of $1 just to ensure that the employees at the checkout would open the register to deposit the money and not pocket

, if someone bought something worth $5 and paid exactly that amount, the employee could just put that money away. And in order to keep such malpractices at bay, the shop owners started using $4.99 as a price instead of $5.

Therefore, $0.99 was introduced as a practical solution for this wherein the employees had to open the cash register to return the few cents to the customer as its really unlikely that a customer would pay the exact amount.

But this kind of pricing became popular and got picked up by marketers. The 99 price ending became a regular pricing hack even after the cash registers got much more sophisticated to ensure proper deposit of the cash.

Psychological Pricing - why do prices end in 99

If I were to answer why do prices end in 99, and why did the 99 pricing phenomena pick up so much, then here would be the simplest answer to it:

Let’s take for example a price of ₹499

The way we look at a price is from left to right. And therefore, the impact of the left-most digit, in this case, 4, is the highest. This makes you as a buyer perceive that the price is in the 400s and not 500.

Therefore, effectively, the psychological difference between ₹499 and ₹500 is much greater than just ₹1.

And that is exactly the reason why a $2.99 seems better to you as a customer than $3.00 and a ₹39 seems better than ₹40.

Because we are human beings and we are not rational.

Prices ending in 99 is more about psychology and less about marketing or pricing mathematics. The 99 price ending is so effective because of what we call the left digit effect.