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That wouldn't apply if everyone included tax in their prices. In this case, the item would just be $1.10. If the business really thinks they will lose money b

That wouldn't apply if everyone included tax in their prices. In this case, the item would just be $1.10. If the business really thinks they will lose money by pricing over a dollar, then yes, they would have to take that hit. But they are already taking that hit if the "real value" is $1.02 for example. It's just a price/demand curve. They would simply have to optimize it differently.

rkomorn 1y ago
There's a reason everything is priced at some variety of .99, 99.99, 999.99, etc: it sells better than 1.08, 108, 1080, etc. My point is getting the consumer to eat the sales tax on top is just a wise trick by US businesses, and nothing to do with complexity.
- jedberg 1y ago
  That's been debunked. Every consumer just auto-rounds in their head. Companies keep doing it because of tradition more than anything else. It is a wise trick, and exactly the job of government -- to prevent the public from getting tricked by businesses.
  - rkomorn 1y ago
    > That's been debunked. Every consumer just auto-rounds in their head. Has it? I'm searching around and not coming up with much that says that's the case. On the other hand, here are some recent-ish links that suggest it still works: - https://www.rd.com/article/why-prices-end-in-99/ https://www.rd.com/article/why-prices-end-in-99/ - https://capitaloneshopping.com/research/pricing-psychology-statistics/ https://capitaloneshopping.com/research/pricing-psychology-s... This one suggests it depends on the consumer, with "highly numerate" consumers being less likely to think the price is lower (but presumably also less common in the customer pool): - https://business.missouri.edu/about/news/99-ending-prices-are-they-really-effective-we-assume https://business.missouri.edu/about/news/99-ending-prices-ar... Edit: searching for "charm pricing" specifically suggests it does work, but I suppose maybe there's some bias on the context in which people use that term.

rkomorn 1y ago

There's a reason everything is priced at some variety of .99, 99.99, 999.99, etc: it sells better than 1.08, 108, 1080, etc. My point is getting the consumer to eat the sales tax on top is just a wise trick by US businesses, and nothing to do with complexity.

jedberg 1y ago
That's been debunked. Every consumer just auto-rounds in their head. Companies keep doing it because of tradition more than anything else. It is a wise trick, and exactly the job of government -- to prevent the public from getting tricked by businesses.
- rkomorn 1y ago
  > That's been debunked. Every consumer just auto-rounds in their head. Has it? I'm searching around and not coming up with much that says that's the case. On the other hand, here are some recent-ish links that suggest it still works: - https://www.rd.com/article/why-prices-end-in-99/ https://www.rd.com/article/why-prices-end-in-99/ - https://capitaloneshopping.com/research/pricing-psychology-statistics/ https://capitaloneshopping.com/research/pricing-psychology-s... This one suggests it depends on the consumer, with "highly numerate" consumers being less likely to think the price is lower (but presumably also less common in the customer pool): - https://business.missouri.edu/about/news/99-ending-prices-are-they-really-effective-we-assume https://business.missouri.edu/about/news/99-ending-prices-ar... Edit: searching for "charm pricing" specifically suggests it does work, but I suppose maybe there's some bias on the context in which people use that term.