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Why do some businesses set their prices at ninety-nine cents rather than a dollar?

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Wiki User
04/12/2008

Stores do not make prices an even dollar because they would like to appeal more to the customers with a cheaper price, even if it is only one cent less. They price at the 99 cents level because they really think the American public will think they have a special low price. Believe it or not a lot of people fall for this nonsense. IIRC John Wanamaker, a Philadelphia department store owner in the 1800s, started this. Back then they didn't have sales tax, so an item priced at $5 cost the customer $5, and the registers depended a great deal on the honesty of the clerks. Wanamaker found that sometimes his staff, when faced with the task of ringing up a $5 sale, would wrap the purchase, take the money, claim he'd ring it up later but put the money in his pocket instead. When Wanamaker priced items at $4.95, the clerk had to open the register to get the customer his nickel.