Thought Leadership

The .99 phenomenon

By Colin Walls

My house is for sale. The price that the estate agent is posting is £339,950. I did not argue with this number, but, after a bit of thought, I do wonder why we do not come clean and say £340K, as that is what anyone seeing the number would translate it to.

This started me thinking more about the prices of things and how the number 9 pops up far more than it should …

In most Western countries, there is a conspiracy to trick people into buying things by obfuscating the price – I call this “The .99 phenomenon”. Where ever you look things are on sale for, say, $2.99 or there is a 99¢ store, so this approach must work.

Interestingly, it is different in Europe and the US. The practice of adding on the tax at the register [which Europeans regard as either madness or just another rip-off] means that, in the US, you never know how much you are going to pay. A $2.99 item may actually be $3.23, for example. This has some interesting effects that I will return to another day.

In Europe, you normally pay exactly what the price ticket says and end up with a pocket full of €0.01 [or 1p] coins. Interestingly, there are [at least] three countries where this is less common: Italy, Greece and Finland. This can be explained. In Italy and Greece, before adopting the Euro, their currencies had been historically affected by hyper-inflation, so their base currency unit [the Lire and Drachma respectively] had a tiny value, so all purchases involved thousands of them. So, the idea of “.99” never occurred to anyone. In Finland, they just think more logically than the rest of us. This has the result that €0.01 and €0.02 coins are rare in these three countries.

I had an interesting experience concerning these coins. Some years ago, my daughter Josie was collecting the sets of Euro coins from each country [they are all interchangeable, but each country has its own design for the eight coins]. I went on vacation to the Greek island of Kefalonia [nice place – recommended] and I thought that I would try to collect the Greek coins for her. But I soon realized that only six of them would be easy to find and essentially gave up looking for the last two. One day, I was on the beach doing nothing except enjoying the sun and running my fingers through the sand [delightful thought, at it is grey and pouring with rain as I write this] when I suddenly found a €0.01 coin. Later, I was talking to a lady who was on the same tour party and she said she would look out for the €0.02. I did not hold out much hope. When I was at the airport, standing in line, she came along looking for me – she had found that last coin. It made a rather nice end to the vacation.

BTW, if you are interested in buying my house, please email me – I will do you a good deal.

Leave a Reply

This article first appeared on the Siemens Digital Industries Software blog at https://blogs.sw.siemens.com/embedded-software/2009/08/06/the-99-phenomenon/