Why Prices End in 99s: Humans Are Mathematically Incompetent | Epicenter from Wired.com

Which is smaller: 298,548 or 298,000? If you picked 298,548, you’re not alone. That’s the ol’ precision heuristic in price magnitude judgments doing its thing.

I have always thought that they are just trying to make the price ‘sounds’ lower than it is by reducing it by 1. To say ’300 something’ for a product priced at 399 surely sounds cheaper than ’400 bucks’!

Need an example? Here’s a very good one:

Apple Store

Here’s another theory to the same question.

It started at Bill’s Texaco in Waco, Texas during a price war. I say it’s a much older management technique to force employees to open cash register drawers for each transaction (making simply pocketing a bill more obvious).

You can read a couple more at The Sraight Dope if you’re interested. Unfortunately, trying to find out who invented it is like trying to find out who invented the hat.