Why is a 99p price tag so attractive?

The tactic of shops ending prices with 99p is nothing new, but a study has found it's as effective as ever in getting shoppers to part with their cash. So why is one of the oldest tricks in the retail trade hard to resist?
In terms of familiar retail ruses employed to entice shoppers to part with their money, ending price tags with 99p, rather than rounding up to the full pound, is right up there with buy one, get one free promotions and half-price offers.
But according to a French study the phenomenon still swings a considerable number of shoppers. Researchers found that lowering the price of a pizza from 8.00 euros to 7.99 euros boosted sales by 15%.
For consumers, the saving is minimal and the copper coins they receive as change when paying with a note seem to be more of a hassle than a benefit - in 2005, Britons discarded or stashed away £133m in unwanted coppers, according to Virgin Money.
So if shoppers aren't concerned about saving mere pennies these days, why are they falling for the 99p effect?
Emotional difference
One theory is consumers just aren't up to the maths. Dr Jane Price, lecturer in psychology at the University of Glamorgan, says we "tend to put numbers in categories like 'under £5' or 'under £6' - rather than them representing a value. Shoppers are aware of what is going on, but don't respond to it because they don't think logically about how close numbers are - such as £99.99 and £100."
She thinks shoppers tend to focus on the big denomination - which the pound sign draws the eye to - rather than the smaller denomination: the pence. There is also the emotional incentive - people like to feel they are getting better value for money.
Robert Schindler, professor of marketing at Rutgers Business School in the US, has published several papers on the "99 effect". He expresses it slightly differently, observing that people overweigh the left hand number.
"When a price changes from $30 to $29.99, the change from three to two makes more of a difference than the value of that money could predict," says Mr Schindler. "It is like when a 39-year-old turns 40, the birthday feels like a big deal. Or when 1999 ends and 2000 starts. It feels like an emotional difference."
Discount associations
It's sometimes suggested the "99 effect" was adopted as a control on employee theft - cashiers had to open the till for change, reducing the chances of them pocketing the bill.
But Mr Schindler thinks it has a different origin. It was introduced for sale items, to emphasise the discount.
"I studied adverts in the New York Times from 1850 - where there were no 99 endings - to the 1870s and 1880s where they started to appear. Although department stores were doing it - which would fit with the cash register hypothesis - they were advertising discounts. But for the regular price they would use a round number," he says.
He thinks the retail practice developed from there, to communicate discount or the impression that things are on sale - even when they are not.
But it is a subtle effect, which works when consumers are susceptible to price sensitivities and are making a snap decision, rather than deliberating over big items like cars and houses. And high end brands which exude a classy image tend not to use the tactic.
Pressure on income
Nick Gladding of Verdict Research, is sceptical shoppers are fooled by the "99p effect". However, in these more straitened times, even tiny adjustments in price can be enough to win over hard up consumers.
"We are seeing fuel prices going up and down by 1p - it is a tiny amount of money, but people want to hear about it," he says.
So are there any other numbers that the unsuspecting shopper should be aware of?
A .95 ending is also popular, observed Mr Schindler, although anyone shopping in Asia might be struck by how prices often end in .88. The reason? Eight is an auspicious number in countries such as Japan, Hong Kong and mainland China.

Make getting fired work for you

Getting a pink slip. Being downsized. Making adjustments. Reorganizing.
So many synonyms that mean the same thing: You're fired.
With the unemployment rate reaching 5.5 percent in May 2008, more and more employers are telling workers that they're out of work.
While losing your job unexpectedly is never good news, it doesn't have to be a setback. It can be a chance to change directions and find a better career.
The day you get fired, you can feel angry, sad and every other emotion that comes your way. The next day, however, take steps to make the most of the situation.
Ask the right questions
You got fired for a reason, so whether it was you, the job or the boss, you need to know what did and didn't work about the situation.
Todd Dewett, a management professor at Wright State University in Dayton, Ohio, and the author of "Leadership Redefined," recommends asking yourself a variety of questions to assess your experience.
"Why did this happen to me? What functional or technical skills do I need to build in order to avoid this situation in the future? How does my professional network need to grow? Are there things about my interpersonal style or leadership skills I need to reconsider?"
Then, he suggests, take action. "You can innovatively and aggressively start answering these questions. The alternative is to blame others and stew in negative emotions -- and that never helped anyone get their career back on track."
You might discover that you needed to move on from that job but weren't willing to take the step.
Look at getting fired as your employer giving you a little push that now allows you to make some drastic changes, says Rachelle J. Canter, career expert and author of "Make the Right Career Move."
"Finding work you love is easily a full-time job. Virtually every career transition client of mine over 20 years has been dissatisfied and made some fledging attempts to find new work," she says. "The lack of financial and employment security provides more time to look and more inspiration to get serious."
It's OK to be happy about it
After hearing that you've been fired, you might be waiting for rage to bubble up or tears to flow, but your initial reaction to getting fired might not be as negative as you expect. You might even crack a smile.
Pamela Skillings, career coach and author of "Escape from Corporate America" has seen people expect to feel bad about their job loss only to realize the benefits of getting fired.
"Of course, most didn't see their pink slips as blessings right away," she says. "It's never fun to suddenly lose your job, though I have heard many say that they were surprised to feel a great sense of relief upon hearing the news that they were being let go."
What now? Once you've asked and answered the questions, you're left wondering what to do.
• Explore your options. Decide whether or not you want to stay in the same field, if you want to make a change or if you want to start your own business.
• Make a plan. Once you know where you want to lead your career, take steps toward making it happen. For example, you might need more training or education if you're going to switch careers.
• Commit. No job search is easy, especially one that you weren't planning, but you can't be deterred along the way when you don't get every position you want. You'll be tempted to return to the familiar if you're making a big move, but trust your decision to start fresh.