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( Psychological pricing)
Psychological pricing or price ending is a marketing practice based on the theory that certain prices have a psychological impact. The retail prices are often expressed as "odd prices" a little less than a round number, e.g. $19.99 or £6.95 (but not necessarily mathematically odd, it could also be 2.98). The theory is this drives demand greater than would be expected if consumers were perfectly rational. Psychological pricing is one cause of price points. According to a 1997 study published in the Marketing Bulletin, approximately 60% of prices in advertising material ended in the digit 9, 30% ended in the digit 5, 7% ended in the digit 0 and the remaining seven digits combined accounted for only slightly over 3% of prices evaluated.[1] In the UK, before the withdrawal of the half penny coin in 1984, prices often ended in 99½. This is still seen today in petrol (gasoline) pricing ending in 9/10's of the local currency's smallest denomination, for example in the US the price of a gallon of gasoline almost always ends in US$0.009 (e.g. US$3.289). In a traditional cash transaction, fractional pricing imposes intangible costs on the vendor (printing fractional prices), the cashier (producing awkward change) and the customer (stowing the change). These factors have become less relevant with the increased use of checks, credit and debit cards and other forms of currency-free exchange. The psychological pricing theory is based on one or more of the following hypotheses
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