When I see a price ending by -9 or -95 or -9 I feel quite comfortable buying but when it comes to 10 or 20 I usually think more about buying a product. Ah, the magic of numbers!
I know that there is something about that in my mind but I am not sure exactly what is it. I did some experiments on myself, when I see a comfortable price let’s say 9.95£, I try to imagine it with a price like 10£… and instantly, I feel that the difference in price 5p as much higher! It is only 5 p difference but the effect on me is quite powerful.
The “99 ending effect” referred as underestimation mechanism, (Alpert, 1971) it seems as well that we have the tendency to pay less attention to the price rightmost digits, our brain not willing to make too much effort processing only so much information (Hinrichs, J. V., et al, 1982)
With more recent studies, a more precise understanding has been developed, it has been showed that 99-ending prices works better with low involved shoppers, lower educated with low income or on young people while the magnitude of its effect is affected by the brand positioning and the price level of the product category. If consumers see a product category as non pleasurable they will be more sensitive to the 99 endings but if feelings or hedonic involvement are present they will be much less influenced by the 99-endings (Gaston-Breton, C., 2011 pp. 21-22).
The more we are in a hurry, the more the involvement is utilitarian over hedonic, the more we can fall into the 99-ending trap and it seems that the majority of restaurant manager are aware of that or at least believe in the 99-ending efficiency (Mangelsdorf, M.E., 2011)
If I am happy buying a snack bar for 1.99£ if I want a high end product, it is a different story. If the product has a round price I might perceive some extra value in it, in my head it resonates a bit like if this high end product is so good that it does not require any marketing trick to be sold it must be really good! Another fact is, if I see two product side by side exhibiting one 99-ending price and on the other one a round price, I might see even more positively the 99-ending price and overestimating the economy realized if I buy it.
Alpert, 1971 in Robert M. S. and Thomas M.K. (1996) pp. 188 Increase Consumer Sales Response though Use of 99-ending prices
and Hinrichs, J. V.,Berie, J. L., & Mosel, M. K in Robert M. S. and Thomas M.K. (1996) pp.188:http://camden-sbc.rutgers.edu/facultystaff/research/schindler/Schindler%20%26%20Kibarian%20%281996%29.pdf
Gaston-Breton, C., (2011) Consumer Preferences for 99-ending prices: The mediating role of price consciousness. pp: 21-22t:http://e-archivo.uc3m.es/bitstream/handle/10016/10707/wb110503.pdf;jsessionid=DC29F330478863148B2816AE4FF6BC03?sequence=1
Mangelsdorf, M.E., 2011 The big difference a penny make. MIT Sloan management review.:http://sloanreview.mit.edu/article/the-big-difference-a-penny-makes/