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Psychological pricing sets price to slightly below a round value, (e.g. $19.99 instead of $20) The seller reduces the price by the smallest possible unit, but relies on the customer to perceive a larger discount.

Is it possible to find out who begun to use this psychological method of pricing and when?

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Wow, it seems that it's 2000th question asked :) –  Voitcus Jul 30 '13 at 18:55
I was just in a seminar yesterday on myths of invention, particularly the myth of the individual heroic inventor. The assumption in the question that this practice was invented, and the other that it was invented by an individual are suspect. So deeply suspect. –  Samuel Russell Jul 30 '13 at 21:38
@SamuelRussell Well, yes, there might be many "inventors". I changed the question so it might fit better. BTW, how could I see why two people voted to close the question (what their reasons are), so I could improve it? –  Voitcus Jul 31 '13 at 7:37
One VTC as trivia (which it clearly isn't) and the other as social science other than history (???). Seems fine to me. –  American Luke Jul 31 '13 at 15:24
@AmericanLuke could you please explain what VTC means? –  Voitcus Jul 31 '13 at 20:16

1 Answer 1

up vote 6 down vote accepted

The practice known as psychological pricing, or odd pricing, was invented in the United States in the 19th century.

Ironically, the original rationale was not to make prices appear lower, but rather to guarantee that customers would receive at least a penny (worth something at the time), in change. One theory is that it was a theft control device to force cashiers to make change (and thereby record the sale) on the newly invented cash register. Another theory is that a newspaper seller who priced his papers at one penny encouraged his advertisers to price their products at X.99, thereby giving back a penny of change for each purchase that could be used to buy the paper itself.

It was only later, in a statistically-driven20th century that marketers realized that customers tended to ignore, or at least underweight the odd cents in calculating the price of products. Once this realization took hold, the practice became widespread.

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Market hagglers tend to have a better intuitive grasp on the psycology of pricing than scientists do. If there truly is some psycological advantage to this, I'd find it hard to believe it doesn't date back at least to the beginning of the use of arabic numerals in pricing. –  T.E.D. Jul 30 '13 at 19:45
@T.E.D.: Well, that would also be the mid-19th century, when the concept of fixed prices arrived with the department store. In Canada the Timothy Eaton company is credited with that development locally. Prior to that all pricing was haggled directly with the store proprietor. –  Pieter Geerkens Jul 30 '13 at 21:42
The point of this site is not to copy-paste Wikipedia in your own words. –  American Luke Jul 31 '13 at 15:28
@AmericanLuke: The point of this site is to ANSWER THE QUESTION. If "copy-paste Wikipedia in your own words" is a good way to do it, that's what I'll do. While Wikipedia provided the facts for my answer, the interpretations are mine, as always. –  Tom Au Jul 31 '13 at 19:00
This answer helped me because I did not know that it is called "psychological pricing", so I accept it, thank you Tom. –  Voitcus Aug 1 '13 at 6:19

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