The .99 Cents Costing
16 Feb 13
This type of pricing is known as psychological pricing and is based on a theory that certain prices will have psychological impact on the minds of the consumers. This type of pricing is based on a hypothesis that the consumers ignores the least significant digits and even the cents are not totally ignored but they may subconsciously be partially ignored. And sometimes the consumer thinks that the goods are marked at lowest price possible. According to the psychological pricing theory mostly consumers judge the price of an item by its left most digit.
16 Feb 13
It will not affect you as you are not the target market for them. The consumers which make their buying decision depending upon their subconscious mind are the target market here. I hope you understand this point. This pricing method is very much older but still the marketers use this method in fixing their product price so it shows that this method is still working.
15 Feb 13
The answer is fairly easy. One cent isn't much but $4.99 looks better subconscious than $5.00 when it comes to prices. You just tend to thing it's cheaper than $5.00. You are more likely to buy something if it appears cheap to you at first sight.