You think of prices ending in .99 as discounted, or you don't think of those last two digits at all. Prices with a ".00" are seen as premium goods, while 4s and 7s seem very precise. Pricing psychology is tricky, and it's almost always in play.
The Wise Bread blog sums up a good bit of the psychology of pricing, and while it feels like you've internalised some of it, having a name for a bit of human nature is helpful. The tendency to ignore the nines tacked onto the end of a price? That's the left-digit effect, and it's real—you see 11.99, and your brain thinks "11 and maybe-something," not "Almost 12." Other numbers are trickier, but you've probably seen them in play as well:
Unusual prices ending in 4s or 7s tend to be seen as precisely priced items. The signal is that the seller has scrutinised its costs and determined the optimal price, fair to both the seller and buyer.
What's the weirdest, or perhaps most effective, case of pricing psychology you've seen? Have you used it yourself on eBay listings or other situations? Photo by anarchosyn.
Party Like It's 19.99: The Psychology of Pricing [Wise Bread]