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For example, a store in the US would list a product as $4.99, yet in the UK it would be listed at either £4.00 or £4.

Is there a reason for this? Why would the Americans need to omit 1 cent from the price? Is there some visual effect that causes consumers to think the price is lower, though the price is actually $5.00 (not including tax). Why is the pricing convention so different as opposed to other countries? Examples of other countries including the UK are Asian countries, such as the Japanese Yen, the Chinese Yuan, etc.

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    Wikipedia has a nice overview: en.wikipedia.org/wiki/Psychological_pricing – DA01 Nov 11 '14 at 3:17
  • It would be listed £4.00 or £4 in UK, they don't have €uro currency. Looking at amazon.co.uk, I see a lot prices that end with .99 or similar. I wonder what countries do, where one Dollar or Euro is like 1 million of their currency... – CoDEmanX Nov 11 '14 at 3:22
  • @CoDEmanX I'm talking about when they advertise a price. When stores put out ads, they never put £3.99 as opposed to £4, but the US will put out $3.99 as opposed to $4 – yuritsuki Nov 11 '14 at 3:23
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The simple reason is this is a technique used to exploit the cognitive functioning of the brain. $4.99 as opposed to $5 seems less because your brain is reading a 4 as opposed to 5 and naturally chooses to ignore the $0.99 unless you specifically put effort to recognise that $4.99 is just one cent less than $5.

Online shoppers usually tend to browse through things quickly and then click on a product. so when you are looking at a list of items in quick succession, the numbers after the decimal are usually ignored by the brain. It was started by Bata I believe using $99 instead of $100 because our brains are not used to doing quick subtraction on the go. They were able to sell a lot more and the cost of letting go of $1 wasn't too high.

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Some stores in the UK use the ".99" pricing.

Curry's is a good example. And as one of their ex staff explained to me once its cleverer than it may seem: the choice of .99 or .98 .97 pricing is actually a 'flag' to their staff as to whether its new or old stock. If its old stock the staff will 'do a deal on it', if you are prepared to haggle.

http://www.hotukdeals.com/misc/inside-info-on-pricing-246957?page=2

If the price is a whole number (for example £300) the product is a new product and is not going to be withdrawn any time soon. If the price is a number with . 99 on the end (for example £299.99) the company has a central stock of these but will not be restocking when these are gone. If the price is a number with . 98 or .97 on the end (for example £299.98 or £299.97) the company has no cenral stock of these and the only units left are the ones in the stores. These are undesireable stock and are the ones that you can make a reasonable offer for that will more than likely be accepted.

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