Psychology of Shopping: Why $29.99 Looks Better Than $30

Whether you're buying gas or a knick-knack at the store, seeing a price with "99" at the end looks a lot less expensive than it does without it. A $29.99 price, for example, has the illusion of being less expensive and is quickly viewed as "20-something," compared with a penny more, $30, which is viewed at first glance as costing "30-something." It's all about the psychology of shopping and how the human mind views numbers, psychologists and shopping and marketing experts tell dealnews.

"The consumer always looks at the low number," says Elliott Jaffa, a behavioral and marketing psychologist.

Why nines? Because they work to attract more purchases. Price endings in nines deliver higher unit sales volumes than the next higher or lower price near the same area, says Tim Smith, managing principal at Wiglaf Pricing.

According to Smith, who has written about pricing strategy, prices ending in nines tend to imply discounts, while prices ending in zeros imply quality. That's why you'll see prices ending in nines in poster shops and fast food restaurants, and in zeros in art galleries and high-end restaurants.

There's another mind trick that can be used when writing prices to make something appear cheaper or more expensive, business consultant Tim Adams tells us. Adding more numbers makes the price appear bigger, and fewer numbers and characters make it appear less expensive, Adams says. Something priced at $5,000 can look cheaper by taking out a comma and making it simply "$5000" or dropping it to "$4999." To make it appear more expensive, add a comma, decimal point and cents to make it $5,000.00. Making a figure bigger would be a trick a consumer could employ when making an offer on a car, for example.

Just don't expect to make an offer of $4,999.99 on a used car from a private seller and expect to get anywhere.

"I think we're conditioned to it when we're dealing with businesses," Jaffa says. "When we're dealing with individuals, it's another story."

Price endings also influence cognitive accessibility, Smith says, meaning that round numbers such as zero are easily perceived and remembered, leading to higher price sensitivity. Odd price endings, on the other hand, are quickly forgotten and not easily compared, meaning you're less likely to go to another store to compare prices.

Busy consumers will try to make decisions based on value, and since we read from left to right, the most important numbers are always on the left. So you're more likely to notice the first number when something is $9.99 and think it's a much better deal than $10 because nine is less than 10. Your mind discards the rightmost digits to save mental energy and time.

Although it's only a penny less, a $29.99 item is psychologically perceived as a mental victory against the vendor than paying $30, Smith says.

By looking only to the left of the decimal point, a buyer is making the decision easier for themselves without feeling overwhelmed with information, says Bruce D. Sanders, a consumer psychologist and retailing consultant. Walmart doesn't use whole dollars for pricing but uses odd price points such as $7.83 and $12.47 because the numbers give consumers a feeling of value.

"They want to come across to the shopper that 'We have shaved off every possible penny,' and that's what odd prices do," Sanders says.

When choosing between a $39.99 item and a $49.99 item that could be complicated to compare features, the best way a salesman can get someone to buy the higher-priced item is to say, "Here's what you'd get for only $10 more," and then describe the benefits of the more expensive item, he says.