Q&A on the News

Q: Why do the products in stores end in 99 cents?

— Andy Sims, Douglasville

A: The concept — called "psychological pricing" — is used to influence the consumer's perception of the actual price of a product. "For one penny, I can get you to think of it differently. If price matters, I can get you to entertain our product," Mark Bergen, a professor at the Carlson School of Management at the University of Minnesota, told WCCO-TV, a CBS affiliate in Minneapolis. If an item is priced at $24.99, consumers often will see it as costing $24, not $25. "There's a magic penny from $25 to $24.99. That penny has way more effect, has way more power. It's magic," Bergen told the station. People read numbers from left to right, so consumers see the first number and often disregard the numbers to the right of the decimal point. "We encode it in our minds before we read all the digits," Vicki Morwitz, research professor of marketing at the Stern School of Business at New York University and president of the Society for Consumer Psychology, told CBSNews.com. Other names for this philosophy include "charm pricing" and "odd pricing."