Every store charges $199.99. The intention is to affect you differently than $200.
What would happen if a retailer said "We want a straight forward relationship, and not to manipulate you, so unlike the bad guys we are providing straight forward pricing"?
The original point of the .99 pricing is so that the cashier needs to open the cash register to make change, thereby producing a record of the transaction. It reduced theft by the cashiers.
On a tangent, does this usually affect everyone in the same way? i ask this b/c right now i'm debating w/ my co-founder over some pricing and he wants to do the $0.99 thing and I want to do flat. The argument is that it sounds more enticing if you knock off the 100th percent, psychologically, which I can see that POV.
Not every store does ".99". The companies that charge ".99" or similar are trying to hook you in on a good deal, while the others that round it naturally are trying to hook you in on a good quality product. Since most consumer products are just pointless (shiny!) crap I think we see more of the ".99" used. :)
Some stores use the cent portion to encode extra information: 0.87 indicates a clearance item, 0.55 indicates a refurbished item, 0.20 indicates a damaged item, and so on.
What would happen if a retailer said "We want a straight forward relationship, and not to manipulate you, so unlike the bad guys we are providing straight forward pricing"?