The Scientific American has a very interesting article about why stores label items as, say, $19.95 instead of simply $20. You probably think it’s simply to make the item appear cheaper and that you’re not fooled by this trick. Turns out there’s more to it than that.
Or if you’re too lazy to read the article, here’s the paragraph that sums it up:
As Janiszewski and Uy explain in the February issue of Psychological Science, people appear to create mental measuring sticks that run in increments away from any opening bid, and the size of the increments depends on the opening bid. That is, if we see a $20 toaster, we might wonder whether it is worth $19 or $18 or $21; we are thinking in round numbers. But if the starting point is $19.95, the mental measuring stick would look different. We might still think it is wrongly priced, but in our minds we are thinking about nickels and dimes instead of dollars, so a fair comeback might be $19.75 or $19.50.