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It attract customers, Customers think its cheap to buy.
Psychological pricing
Yes, indeed. It is psychological effect.
Human mind usually round figures down. If you ask someone how much does it cost, most often he will say90 and somewhat. Which is much less than100.
Normally We found there is taxation variation regarding the pricin.sometmes customers also complains the present pricing scenerio i.e.99.95 as they prefer in round figure..secondly we can say it is pshychological effect for the customer
Next higher number AFFECTS/Has impact on the mind ,this effect is used even by those companies in high value business like CAR etc,assuming few people go for High value purchase,even here lower value figures are used.
WOW....It's Interesting companies knows the psychology of consumers and limits the price under three figures that increase the sale dramatically .
The psychological pricing makes it (or better gives the impression that it is)) cheaper especially when you "save" a digit. e.g:99.9ç instead of100! The same applies for FX,: You easily buy something EUROS5.50 rather than INR300! although you have been fooled in the FX rate! Free shops owners know that ...
Psychological Pricing. Consumers tend to perceive these prices as being significantly lower than they actually are, Considering it to the next lowest monetary unit. Hence prices like $5.99 are associated with $5 and not $6.
In England we have a saying "every penny counts" ^_^... The remaining5 out of the100 if saved up over a period of time they will give you another100 to spend. Our minds work in mysterious ways we create illusions and make our selves believe them, that's the beauty of reverse psychology.
Because it’s simple mind illusion
This creates a powerful difference between its real value and its perceived value
Consumers perceive prices to be cheaper if they end in odd numbers
Play with the buyer's emotions and make him believe that they is paying lesser than the regular price
