Why Almost Every Price Ends in 99 Cents

$4.99 and $5.00 are one penny apart — but your brain doesn't see a penny. It sees a 4 and a 5. Stores have known that for about a century, and one clothing catalog found that RAISING a price could actually make it sell more. In this episode: the cashier-theft legend (and why it's probably not true), the left-digit effect, the "bargain signal," why gas is priced in 9/10 of a cent, Costco's secret price-ending code, the catalog experiment where $39 outsold $34, the twist from 98 million grocery prices — and how to read prices the way the store hopes you won't. 0:00 $4.99 vs $5.00 0:16 The cashier-theft legend 0:34 Step 1: The left digit 0:50 Step 2: The bargain signal 1:06 Step 3: Gas and 9/10 of a cent 1:22 Step 4: Costco's secret code 1:36 Why almost every store does it 1:48 The catalog experiment 2:04 The results 2:17 Why it works on your brain (the twist) 2:32 How to beat it 2:46 Next time Sources Thomas & Morwitz (2005), "Penny Wise and Pound Foolish: The Left-Digit Effect in Price Cognition," Journal of Consumer Research — summary: https://www.sciencedaily.com/releases... Anderson & Simester (2003), "Effects of $9 Price Endings on Retail Sales: Evidence from Field Experiments," Quantitative Marketing and Economics 1:93–110: https://www.kellogg.northwestern.edu/... Snir & Levy, "If You Think 9-Ending Prices Are Low, Think Again," Journal of the Association for Consumer Research: https://mpra.ub.uni-muenchen.de/96614 Costco US Orientation magazine (2018), glossary p.19 (.97 / .00 / asterisk): https://www.costco.com/wcsstore/Costc... CNN Business, "Why gas prices always end in 9/10 of a cent" (2022): https://www.cnn.com/2022/06/14/energy... The Straight Dope, "Why do prices end in .99?" (1992): https://www.straightdope.com/21341889... Wikipedia, "Psychological pricing": https://en.wikipedia.org/wiki/Psychol... The cashier-theft origin story is a popular explanation, not a proven one. Costco's price-ending meanings come from a 2018 US employee training magazine and may vary by warehouse or change over time. Prices shown on screen other than those cited are illustrative. This video is for education and entertainment, not financial advice. Animation, script and editing: Nice Try, Corp. Music: original.