The invention of .99 cents pricing
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- Опубликовано: 17 сен 2024
- Dani Siller, Bill Sunderland and Matt Parker discuss a question about an ingenious pricing scheme.
LATERAL is a weekly podcast about interesting questions and even more interesting answers, hosted by Tom Scott. For business enquiries, contestant appearances or question submissions, visit www.lateralcas...
GUESTS:
Dani Siller: @consumethismedia, / escthispodcast
Bill Sunderland: @consumethismedia, / escthispodcast
Matt Parker: @standupmaths, / standupmaths
HOST: Tom Scott.
QUESTION PRODUCER: David Bodycombe.
RECORDED AT & EDITED BY: The Podcast Studios, Dublin.
EDITOR: Julie Hassett.
GRAPHICS SYSTEM & DESIGN: Chris Hanel at Support Class.
GRAPHICS ASSISTANCE: Dillon Pentz.
MUSIC: Karl-Ola Kjellholm ('Private Detective'/'Agrumes', courtesy of epidemicsound.com).
ADDITIONAL QUESTIONS: Josh Halbur, Ben Justice, Lewis Tough, Arun Uttamchandani, Eglė Vaškevičiūtė.
FORMAT: Pad 26 Limited/Labyrinth Games Ltd.
EXECUTIVE PRODUCERS: David Bodycombe and Tom Scott.
© Pad 26 Limited (www.pad26.com) / Labyrinth Games Ltd. 2022.
I used to go to a sandwich shop/arcade in college. The owner had adjusted all his prices to end in multiples of 25 cents. He reasoned that if you bought a sandwich and got 14 cents in change, that was 14 cents he'd never see. But if you got your changes in quarters, those were likely to go into the video games or pinball machines and then back to him.
Oh, now that's clever! So much more effective than the 99c thing!
@@ronchappel4812 and much more fun for everyone involved.
No tax, or outside America where tax is included in price?
@@punkdigerati Actually he calculated the prices so that the price *after tax* would end in multiples of 25 cents. So the price on the menu may be 4.37 but after tax it comes out to 4.50 (don't try to do the math, I just made up some numbers here)
I wish stores would think this way more often.
just to add what Wikipedia says about this-the editor suggested the .99 pricing as a measure of honesty, so cashier tellers are always forced to make change instead of taking your ten dollar bill and claiming you gave them five.
This is the story that I always heard. It was to force the cashiers to use the register and thus not be able to easily pocket the money when no one was looking.
I was always of the understanding it was to make the cashier open the till and log the sale, preventing them from pocketing a note.
I've heard that too, but the automatic cash register wasn't invented until 1879, three years after this anecdote. I'm sure that neither innovation was adopted all at once, and different groups must have had different motivations.
Personally anytime I see a $9.99 I automatically translate that to $10 in my head.
You think so, but still the effect lingers to some extent.
@@aceman0000099 That may be but I can't see the difference between $9.99 and $10, but then I've always been a bit odd by not following the trends.
@@aceman0000099 I was thinking the same thing, even if you consciously realize it’s $10, you still say $9.99 out loud, and it still somehow seems cheaper
@@nanoflower1 consciously, you may think one thing, and the subconscious may think another. You can't be certain.
this actually did happen for me, even though i do turn 9.99 into 10 automatically, i saw the new zelda’s pricing and I was like “oh its only 60 dollars” then my brain reshifted and i realized it was 69.99
"What is a nine but a more flamboyant zero." -Matt Parker 😂
“What is a lowercase b but an upside down p? What is a lowercase q but a moved around p?”
- Mike Trapp
Please put the full episodes up again. I know people complained about the highlights, I am among them, but I feel you did it the exact wrong way round. I would love to *see* the full episodes, it would just be great if the highlights could be more separated from those full episodes. The visuals add so much to the whole thing (which I suppose is actually not that great for a podcast) that I really prefer it to listening to the full podcast and having to go back for the visuals
I would very much appreciate the full episodes being uploaded to youtube. It's much more engaging to be able to see people's facial expressions and gestures.
Yes please
in some stores round where i live the number at the end is a code. 99 cents means full price, 97 means sale price, 98 means overstock price, etc.
I immediately thought of a newspaper editor as soon as he said it was a suggestion based in self-interest but for the wrong reason. When writing essays in college I usually struggled to constrain my words to the required page limits. Thus I had to use tricks such as adjusting the margins or spacing between lines and paragraphs, text sizing, or indentation in order to comply. I imagine the editor of a physical newspaper has to consider such restraints in the course of their work-so I figured he suggested the pricing change to make his job easier by reducing the number of digits used to display prices in the paper. However, I realized this only makes sense if decimal places were always printed, e.g., going from $10.00 -> $9.99. But if printing whole numbers in the paper was a regular practice then he'd actually be making his job more difficult by going from $10 -> $9.99 for example. The actual answer cited in the video was very interesting!
I was thinking he was trying to make the paper longer by adding more letters.
I figured that too. Newspaper ad space being sold by the character, so $5.99 is 150% more characters than $6.
From the very start my guess is he owned a copper mine and wanted to increase demand for pennies so the government would buy more copper from him (notably, such mining companies are a major force in opposition to getting rid of the penny in the US today).
Since he was an editor, I figured that it also might have something to do with the fact that many ads charge by the character, though I’m not sure how recent this method is compared to fraction of a page-based prices. $6->$5.99 (+3 characters) and even $10->$9.99 (+2 characters). It might not be a huge boost to their ad income, but it would still ad some nonetheless.
That's what I thought as well
Please release full episodes on RUclips
Dani and Bill should be on every episode. They're too good.
and strangely enough, some people feel the opposite (more Bill and Dani for me then)
Is anyone going to mention the Verizon math going on in the title of this video... ".99 cents"?
Whats verizon math supposed to mean?
Now that you've mentioned it, can't unsee it... a curse on you, cur.
There are actually multiple explanations for the .99 cent prices. Another one I know is that it was made to control the clerk workin in the shop. Because these clerks often sold stuff without going through the cash register and pocketed the money themselves. When the first cash registers were invented that registered sales mechanically back in the 1800s, shop owners started changing the prices, so that the customer received a small amount of change and the clerk had to go through the register.
Doesn't make sense because the clerk could still give their own 14 cents (or whatever amount)and still pocket the dollar. Yes they could still steal, just slightly less per transaction.
@@themoviedealers No, they couldn't, because that way the customer wouldn't get a receipt.
@@MyRegardsToTheDodothe timeline doesnt add up, this story regarding the 99 prices dates to 1876 but automated cash registers(also called incorruptible cashier) weren't invented till 1879(though patented 1883 so presume some additional development between) automated receipts from the register weren't a thing before this(and also not on the original design but added later) as earlier they were just a mechanical counter that had a drawer, any receipt if used would have been hand written.
@@themoviedealers Scenario 1: Customer walks up and says "I want this." Cashier says "That'll be ten dollars even." Customer slaps down a bill, turns around and walks out. Behind his back, the cashier slips the bill into his pocket without logging the sale.
Scenario 2: Customer walks up and says "I want this." Cashier says "That'll be nine ninety-nine." Customer slaps down a bill *and stands there waiting for his change.* Because the customer is standing there looking, cashier must now either ring up the sale on the register, thus logging it, or else make it obvious to the customer that he's cheating.
Bill doing an amazing (albeit unintentional) impression of John Mulaney at 2:32
And Tom doing an impression of David Mitchell at 4:11.
I was sure that the advertisements that shopkeepers could run would’ve been paid her character, and the newspaper would’ve increased its cost by at least three characters if the prices were X .99.
I was taught in both social studies and business studies in secondary school that it was extra revenue because most people don't want pennies hanging about in their wallets / purses. So they tend to put it in the charity box or ask the cashier to keep it.
Then why not just charge 10 dollars instead of 9.99?
@@Seth9809because it looks cheaper I guess?
@@vesper7750But then you do it because it increases sales, not for more "keep the change" type moments.
And I doubt that people were as commonly not caring about their pennies 150 years ago when individual pennies held actual, practical value.
This episode had some really good questions in it. I liked that one with the cereal boxes too.
The thing that pisses me off about .99 cent pricing is how often it works.
Got fooled by $109 hard-drive once too. over $120 after adding VAT and I guess an adapter card.
the bigger issue there I guess is not having taxes included in the advertised price. ;)
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Wow, I was SO sure it was gonna be related to Benford's Law, and that his newspaper (or some other printing business) had a glut of nines that they had to use up.
Full episodes on youtube
I thought it was to stop staff stealing, if it’s £5 the till doesn’t get opened money to the staff, 4.99 they have to open the till to give the change, money into the till
So, when did we start adding sales tax? Because this theory goes out the window if that $5.99 plus a penny is actual going to cost $6.48 after tax (I realize it wouldn't have been as high as that back then, but still).
The story I was told is that it forced the cashier to put it through the till, so it prevented any sticky fingered cashiers from just pocketing the money given to them by the customer. Certain shops like the Co-Op, and Burtons never did this,, not to squeeze an extra penny out of customers, but as mark of respect/trust to their staff.
I was thinking it was so the paper could charge more for advertisements since $6 would charge for two characters [typesets or whatever printer blocks are called] while $5.99 charges for five.
happy to finally get one before the contestants, haha!
Guess at 1:23 had Melville somehow come into procession of shedloads of pennies
And now I know who to curse every time I see this pricing now. "Curse you, Melville Stone! And your little pennies, too!"
I also heard it kept the cashiers honest, because they had to ring the sale up and open the cash drawer to get the penny.
I always thought this was to do with the shop staff having to physically run it through the till. Some nefarious staff might be tempted to just pocket the $6 dollars. But by having it priced at $5.99 they would have to get the customer their 1 cents change so would need to run it through the till.
I believe this came up on QI once upon a time.
The whole thing of 5.99 looking cheaper than 6.00 is completely true as well. Apparently it increases sales by up to 10% in various studies done on the subject.
I thought it would be because the ad space would use more characters so they would have to pay more for that.
I absolutely hate .99 cent pricing, and now I know who to blame. Still, I have to admit that was a pretty clever business decision from Mr. Stone.
2:19 I'm guessing that all the "left-over pennies" might have served him some kind of counting-token purpose, making inventory-checking easier? some "rounding error exploit" with taxes perhaps?
Watching on...
The US did actually use to have a halfpenny! It only stopped being minted in 1857.
Also, apparently (if this story as a whole is even true), Stone advertised the price drop as a way to combat employee theft. Having to do math makes that harder in his mind, I guess
20some years ago, when a barista named Mike had to give back 5 cents in change, he'd say 'Here is your nickle back.' Mike and his brother Chad played in a band. They used to call themselves The Village Idiots, back when they only did cover songs. But when they became a real band & needed a real name, they adopted Mike's customer service catchphrase: Nickleback
I was gonna assume that they charged by the character for adverts in their paper and $x.99 is 3 more characters than $x. It adds up in the end
I'm not usually quick on the uptake, but this time I got it as soon as I heard the word 'editor'.
I don't know if it was true at the time, but newspapers only cost money to buy because it is the surest way to make sure they sell in the numbers the publisher says they do. See, the real money is in ads. To sell ads, though, a newspaper has to prove that it can reach enough readers to justify the expense of an ad. You can't just rely on the publisher for that, as they'd have all the interest in the world to upsell their figures. In many places, the only honest way to make sure is with money. People have to part with their hard-earned money and buy a copy. The money from the sales therefore can be used as a reliable indicator of those sales. To make a long story short, the papers would cost much more than 1¢ per copy. That's why there are those coin-op newspaper machines at city corners, even if someone can put a coin, open the lid and take all the copies: The physical newspapers are already paid for by ads. Newspapers, they're basically free, but free papers can't used to ensure readership. I for one would have no qualms about taking multiple copies to line a cockatoo's cage, and those ads would serve no purpose to me or the advertiser.
this is one of the ones where i nearly had it at the start. the whole time i was confident that it had something to do with the 1 cent coin and keeping it in circulation but wasnt sure why
Interesting topic, always wondered why the prices are like this!
I like the single question / sub 10 minute clips! A half hour video requires me to pay attention whilst working and concentrating, so I either pay attention to the video and skive, or miss the video. 6 and a half minutes is a cup of coffee length and a perfect break. It works for me!
Yes, I don't bother with the podcast at all - I just cherry-pick whichever highlights look interesting.
Guess: his ad space sold by the character and $4.99 thus made him more profit than $5.
In Thailand, the 99 still works. 599 baht, pople will say it is 500+ baht, ignoring that it is just one baht shy of 600. They are always surprised when I explain to them.
Also people struggle to add up the cost of multiple items when the price has 99 pence. People tend to get a lower price and then when the get the to till the realise their mistake but end up paying anyway and spending more that they had planned
Wait, people actually add lower price? I thought everyone converts 9.99 to 10.00, so you just pay few groszy less.
@@PouLS Ah someone from Poland
Then we get into the pricing for gasoline.....with the fraction of the penny
He had an absolutely ridiculous surplus of pennies, and had to find a justification to give them back as change
I always round up to the nearest dollar in my head and buy the cheaper item every time. OR I don't buy. PREIOD. I choose not to spend that penny.
Matt missed a trick there. For his online store, he should have made everything cost $(X.9) recurring, so everything is always $(X+1) without actually losing a cent.
I was thinking that Melville was just really politically invested in the idea of coins and so he wanted there to be more coins in circulation.
I'm kind of surprised how close I was
(knocking with hands)
In the early 2000s people of Japan got the worst of both ideas - 999 or 998 ¥ on the price-tag, then they added VAT at the till so everything ended up 1013¥ and you had to add a couple of small coins to pay...
Not having VAT on the price tag should be illegal worldwide.
What type of margins are you making on a penny?
There must not have been a sales tax added at the register. That must be why they're called the good old days.
The title of this video hits my rage button hard. ".99 cents" is LESS than one penny. What was meant was "99 cents". That is prices that end in 99, like "$5.99". Either 1) use the bare number with the word "cents" or the number followed by the cent sign or 2) write it with the decimal and the dollar sign. Not this half and half junk.
I thought of penny candy almost immediately -- close, but wrong.
99-cent pricing, not ".99 cents pricing".
Im sorry, what is "shift copies of their paper" for one penny means?
In Britain, the reason items end in 99p is so that cashiers have to go into the till for change, and every transaction is counted, so they can't pocket any money for themselves.
ruclips.net/video/z-0E0bOADXk/видео.html
America had half-pennies
we actually did have an equivalent to the halfpenny, called the half cent. it was minted until 1857 at which point it was no longer particularly viable.
i think i had heard a story a while back where the reason the pricing was marked as 99 cents was to ensure that shopkeep would have to use the register to put the money away rather than pocketing the money. might have been a disproven QI fact though.
it was on qi
It has always confused me why that allegedly works. If I cared more, I'd look up studies on it. 😅
But I myself always round up when it's a small difference. And by "small", I mean that I e.g. see 28$ as 30$. Pennies? Please...
As well as looking cheaper, and apparently making it easier to buy inexpensive newspapers, I'd also heard a suggestion that it was to force the use of the till to extract the penny to reduce the opportunities for the staff to just pocket the money
899 likes! Cool.
I recall hearing (I think from one of Tom Scott's videos) that the reason shop owners set their prices to 99 cents was so that the teller would have to ring it up to give the customer change. Otherwise, if they didn't have to open the register for every transaction, they might end up pocketing the money or something like that.
I never fully understood that explanation, but that's what I'd heard.
That's one of the stories that goes around, not sure if it has any basis in reality.
On an episode of QI when this came up, a panellist (Nish Kumar, I think) stated that he worked in a shop and the shop owner stated openly that he was doing it for that exact reason.
My guess had been he was in the penny making business or owned a copper mine.
So the reason we have this annoying X + 0.99 pricing everywhere is because a newspaper editor wanted to manipulate people into buying his paper? Damn, capitalism really is annoying, isn't it? 😂
I was always told it was because as a business .99 gets you the most money without paying an extra dollar of taxes so like if you pay 7 cents for every dollar than you’re technically making 6 cents by doing that
Actually, the US did have half pennies for a time
But then people got in the habit of throwing all their pennies in jugs, pots, old bottles or whatever and then forgetting about them for years until someone with a lot of spare time discovered and took them down to the auto coin converter and traded them for a bunch of paper money.
Sign Paraphernalia :)
Wow, this must have been when people actually paid CASH for items. I still like using cash and people (cashiers) look at me like I am crazy when I try to use coins for exact change or worse, add 2 pennies to what I give them so I can get a quarter back instead of 23 cents.
I never had this problem (people giving me a blank stare when I drop some coins in to make the change an exact amount) in Australia growing up; but I think I would these days, because of the increasing rate of innumeracy in the country
Yet Tesco use/used .97p I think it was to be different. Now everything is rounded up.
In for a penny . . .
4:30 missed an opportunity to tell scream at her that she's not in the kitchen
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