Tim Arango wrote an interesting article in the New York Times about .99 price ending. He records the history of .99 prices which seems to have been first published in 1860 by Rowland Macy (1822 - 1877), founder of Macy's Department Store. The success of this promo encouraged retailers to multiply this kind of pricing. Other explanation can be found in the odd fact that prices ending in .99 was a way to fight internal robbery: employees were forced to give change to customers (at least 1ct) and therefore oblige salesmen to register the purchases...
The psychological factor is often used to explain success stories like iTunes or the One Dollar Store chains. Many economists made studies trying to measure the effect of such prices. But the truth obliges to say that the positive effect of .99 prices is still to be demonstrated !
Photo : Denkschema in Flickr
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