That's the Anchoring Effect. It's not just about 3.99 appearing cheaper than 4.00. It appears cheaper than 3.00 because the 9's make the 3 look small. $3.29 ap

That's the Anchoring Effect. It's not just about 3.99 appearing cheaper than 4.00. It appears cheaper than 3.00 because the 9's make the 3 look small. $3.29 appears especially cheap. The cheapest-looking price point between $3 and $4 is probably $3.19 or $3.29. ($3.09 isn't as cheap-looking, because the '0' adversely anchors the 3. There is a trade-off in the appearance of simplicity, of course. If you're selling cars, for example, you get more mileage (no pun intended) out of $29,500 than $29,999.99. Restaurant menus are one example of that, wherein whole numbers ending in '8' and '6' seem to be favored (18, 28, 36).