Ah, the psychology of pricing…. It’s common knowledge that $9.99 is perceived as way cheaper than $10. But is it?

Here’s some study from Cornell University that shines a new light on the psychology of pricing: ‘Contrary to expectations, guests given the numeral-only menu spent significantly more than those who received a menu with prices showing a dollar sign or those whose menus had prices written out in words.’.

Another source tells ‘Menu prices with decimals seem to confuse’. Disclaimer: the site, ‘Stuff White People like’ is somewhat humorous; but to the point, nonetheless!

Here’s my take:

- If price is an integral part of the value, i.e. people buy it because it’s cheap, then price shall be prominent. So, no rounding, big dollar sign:

Fast food sandwich: $5.95

- If the good is purchase despite its price, then make the price non-attention grabbing as possible:

Truffle Linguine: 36

By the way, the extreme situation of some luxury goods not even displaying price is still another approach… By surprisingly not showing price, they make it a big part of the Veblen good!

In any case, do not make the price tag more elaborate that it should be, because it makes the whole purchasing decision more complicated: Truffle Linguine - thirty six? No thanks.