Why so many retail prices end with the digit nine

She had just comeback from shopping and was in a chatty mood.

"You know V, I shouldn't have gone shopping now," she said.

"Oh. But why?" I asked.

"The big sales all happen in January and I ended up paying so much more for the four pairs of shoes that I bought."

"Four pairs?" I asked.

"Yes," she replied.

"Okay. But you got the pleasure of shopping now."

"True."

"And if you can shop now, why postpone it to later."

"Okay. Now don't stretch it," she replied. "

"Hmmm. On a serious note, in my experience, during sales one doesn't get the best stuff. A lot of compromises need to be made."

"And that too."

"Yup."

"You know V, I wanted to ask you something," she said.

"Tell me."

"Why do prices of so many products I buy end with the digit 9. Look at this skirt I bought," she said showing me the white skirt. "It is priced at Rs 999. Why not Rs 1,000 simply?"

"Good question."

"Everywhere I look that seems to be the case. This phone I want to buy is priced at Rs 14,999 and not Rs 15,000. The book I bought yesterday for you was priced at Rs 699 and not Rs 700. What is happening here?"

"The left-digit effect is at work."

"Which is what?"

"Most human beings read from left to right and given that the first digit of the price registers the most in the human mind."

"So?"

"Let me just explain by reading something from a book."

I got up from my chair and went looking for Alex Bellos' book Alex Through the Looking Glass.

"Here it is," I said.

"What does it say?"

"As Bellos writes: "When we read a number, we are influenced by the leftmost digit than we are by the rightmost, since that is the order we read and process them. The number 799 feels significantly less than 800 because we see the former as 7-something and the latter as 8-something."

"Yes. Now that you put it that way, it does make immense sense. A price of Rs 799 just feels to be so much more lower than Rs 800 and makes me buy the stuff."

"Doesn't it? And this is something that most companies in the business of selling things especially to the retail public, tends to make use of."

"Yes."

"In fact, research shows that when the last two digits of a price are 99, sales tend to go up. As Bellos points out in his book: "In 2008, researchers at the University of Southern Brittany [in France] monitored a local pizza restaurant that was serving five types of pizza at €8 each. When one of the pizzas was reduced in price to €7.99, its share of sales rose from a third of the total to a half. Dropping, the price by one cent, an insignificant amount in monetary terms, was enough to influence customers decisions dramatically.""

"That's interesting."

"Just pricing something one cent less, sent the sales soaring. It's just bizarre. A psychological anomaly, but the numbers don't lie," I said.

"That's kind of crazy."

"Also, this tends to happen more at the retail level. You won't see it happening at a classy restaurant or an upmarket boutique."

"Yes that makes sense."

"As Bellos writes: "An up market restaurant, for example, would never dream of pricing a main course at, say, £22.99. Nor would you trust a therapist who charged £59.99 a session. The prices would be £23 and £60, which feel both classier and more honest.""

"That's very interesting," she said.

"Indeed."

"But it isn't going to help me in any way."

"Why?"

"Just because I know I am being psychologically taken for a ride, doesn't mean I will stop shopping, na."

"Really?" I asked.

"Sometimes you can be so dumb V."

"Let me make us some coffee," I said, and went into the kitchen.

The example is hypothetical

(Vivek Kaul is the author of the Easy Money trilogy)