The Science Behind Prices Ending With $9

Ever seen those price tags that end with the digit 9? Sure you have! Around 60% of all retail prices end with this number. Why? Who started it? No one knows for certain.

But what we know, and marketers and economists agree on, is that ending a price with this number tends to increase sale. Maybe it is something that is hardwired in people? Maybe it is the psychology, the comfort of staying within a two digital price tag.

Surely a price of $99 seems just that little bit better than $100.

Interestingly, a few MIT folks decided to go for some empirical evidence. This study is somewhat old now, from 2003, but is still relevant. They basically used a mail order company that sold women’s clothing to price the same item at three different price levels — that is $34, $39 and $44.

No prizes for guessing what price tag outsold the other!

The $39 price beat the other two, by margins between 15% and 30%. This is worth a paraphrase. The same product sold more units at $39 than it did when it was priced $34. So there definitely is some psychology involved here.

And that is one reason why many online marketers price their products at either $9, $19, $29 or $49. It is not a hard and fast rule, but if it works for you, then go for it.

Here is the link to the PDF file about the effects of prices that end with $9.

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  • I’ve read something similar to this before. It makes logical sense. $39.99 seems less than $40 for whatever reason. It’s certainly something that I’d recommend doing when pricing your product.

  • In my country (Czech Republic) they say that Tomas Bata started the “9” pricing thing but of course that is difficult to verify.

    • Very interesting. I had never heard that before. What do you think his reasoning was? Did he just try to price lower than competition or did he conduct some studies?

      • I never really look into that, it’s just that the memory is stuck in my head from childhood.
        Wikipedia page about him says this:
        “Also typical is so called “Baťa price” used to give a price ended almost always by number nine. Basically meaning that a price 99 or 19.99 looks apparently much better than rounded number such as 100 or 20, even though the difference is just 1 currency unit.”

        • Excellent information Solun! I have noticed this trend and am shocked that 1 cent (even to make) makes such a perceived difference.

  • I think most companies still do it because there’s such a small difference in profits from a cent difference. At this point though, I think most people are aware of the fact that this is simply a ploy to make something appear cheaper.

  • Is this some human psychological element that perceives a round number as more than one rounded to the highest percentage or just because it’s so engrained in pricing nowadays that $20 seems like a ripoff compared to $19.99? Kind of a Chicken vs. The Egg sort of thing.

  • I read all of the PDF file. An excellent read for anyone who has the time! The data and analysis is first class. Nice post Bradley!

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