Price endings: why the pence matter more than you think

There’s a small lie we tell ourselves about prices.

We tell ourselves we’re reacting to the size of the number – the cost, the affordability, the value.

But in practice, we often react to the shape of the number: the digits, the endings, the formatting, and the tiny cues that tell us whether a price is a bargain, a premium, or something that’s been carefully worked out. 

That’s why £19.99 doesn’t behave like ‘£20 minus 1p’. It behaves like a different psychological object altogether.

And that’s why a price ending is not a tactical detail. It’s a positioning decision – whether you intended it or not.

Let’s walk through six common approaches to the pence part of the price, what each one is doing, and when it tends to help (or hurt).

1) Charm pricing (.99 / .95 / .97)

Charm pricing is the classic ‘just under’ ending, such as £19.99 rather than £20.00, when the act of knocking off 1p (or 2p or 3p) changes the first digit. It works because, in the western world, we process numbers from left to right. As we do, our brain puts numbers into ‘buckets’. So £19.99 goes into the ‘tens’ bucket, while £20.00 goes into the ‘twenties’ bucket.

Psychologists call this ‘left-digit bias’.

Although not strictly called Charm Pricing, changing a price from £23.00 to £22.99 has a weaker but similar psychological impact – the first is a ‘£23’ number, while the second is a ‘£22’ number. It works but it’s nowhere near as powerful as a change to the first digit.

There are other psychological things at work.

It feels smaller because it isn’t round: Round numbers have psychological weight. £24.00 is clean and firm. £23.99 is fiddly and therefore (to many brains) lighter. Because it is more exact, it also implies that more effort has gone into working out the price (especially if it ends in something other than .99, such as .97 or .94).

Additionally, consumers have learned the retail language: .99 endings often signal ‘competitive’, ‘good value’, ‘sale’ or ‘deal’.

It works best when customers are not paying a lot of attention. It’s a shortcut effect. If customers are in ‘fast mode’ (for example a low involvement, routine purchase) then it’s more powerful.

Where it absolutely doesn’t work is in premium markets. It suggests ‘promotion’ or ‘mass retail’. If you’re selling high-value luxury items then it can detract, it can make the product seem cheap.

And, of course, there is an exception to the exception. While things such as house sales are definitely not ‘fast mode’ or ‘low attention’ purchases, left-digit bias still applies – but in these circumstances the first digit is usually changed by reducing the price by £1 or £5, such as a £400,000 house being marketed as £399,999 or £399,995.

2) Precision pricing (£23.47 / £19.38 / £4,128.61)

Precision pricing is exactly what it says it is – prices are shown to an appropriately exact number of digits. Examples of precise prices would be £23.47, £19.38 or £4,128.61

I’ll come back to why I said ‘appropriately’.

Precision implies the number was derived, it was calculated, there is some science behind it, and it has not just been plucked from thin air. It also communicates competence, because it makes you look rigorous, measured and fair – especially in B2B or technical settings.

Although there is an element of precision behind how Charm pricing works, the extra precision of .47 suggests there is a solid reason for the price, while a .99 ending suggests a sale or bargain.

Because a precise price looks like there is a detailed calculation behind it, less negotiation takes place. This has been demonstrated even with high value assets such as homes (in B2C markets) or the sale of businesses (in B2B markets).

As always, there are potential downsides. Pennies can irritate when they feel irrelevant. It’s harder to pay a precise amount which requires change than a round amount.

At the top of this section I used the word ‘appropriately’. That’s because the precision needs to be believably justifiable. For example, if you need a plumber, and they quote £862.87 for some work, you may be tempted to wonder where the .87 came from. How on earth can a quote be that precise? Are they just making it up? The same would be the case in B2B, where a quote of £11,632.72 from a law firm for some work would feel ludicrous. If, instead, the law firm quoted £11,630 then that feels both exact (it’s not £11,500 or £11,750) but reasonable (it’s not down to the penny).

You need a credible story for where the number came from.

3) Rounded prices (whole pounds / fewer digits)

This is where you remove the pennies entirely, for example £4,128 rather than £4,128.61 (or even better, round up to £4,129 instead of just truncating the number).

There are a few things behind this. First is processing fluency – round numbers are easier to read, compare, and repeat. There is less cognitive weight because fewer digits = less mental effort. Most importantly, there is a psychological shortcut we use to estimate a number’s magnitude – the more digits the bigger the number, so £4,128.61 has six digits in total, while £4,128 has only four.

Because of the impact of fewer digits feeling like smaller numbers, I have a very strong aversion to rounded numbers that still display .00, such as £23.00 instead of £23. When working with clients I always suggest suppressing or removing the .00 pence.

In the right markets, this shifts the customer’s evaluation mode. Rounded prices move buyers away from calculator mode (‘is this the cheapest?’) and towards judgement mode (‘is it worth it?’).

One important and obvious caveat links back to the previous two topics. As we’ve discussed, in price-sensitive, low-ticket retail sales, exact numbers feel smaller than round numbers.

4) Prestige endings (‘clean’ presentation)

This is a deliberate choice to not display pence to support a premium feel. Clean price endings signal curated quality, luxury goods and brand strength.

Using Prestige endings is important in high-involvement buying, which is particularly relevant for luxury or premium goods. If customers are weighing risk, quality or exclusivity, then prestige endings can match the seriousness of the decision.

It is also highly relevant in B2B sales, where buyers are assessing risk, reputation, expertise or outcomes. Occasions where this is an issue can include buying professional services or major assets.

5) Even vs odd endings (the ‘meaning’ of the ending)

The idea here is that endings function like codes – not formal codes, but learnt cues. Odd endings cue ‘competitive / deal / sharp’: .99, .95, .97 often read as price-led, promotional, value-driven. Even endings cue ‘standard / stable / premium’: no pence (.00), .50 and whole numbers often feel calmer and more stable.

As with all these concepts, category norms matter. Customers learn what’s ‘normal’ in a category. Break the pattern and you might look wrong.

6) Cognitive load and readability (the mechanism underneath everything)

Cognitive load is all about how hard the price is to process. Fluency affects judgement, where easy-to-process information feels more truthful and more likeable. So £12,500 feels better than £12,513.

Customer/buyer attention is important.

Under low attention circumstances, people use shortcuts (left-digit bias, bargain cues). But under high attention circumstances, they scrutinise fairness and justification.

When pricing is complex, consumers often resort to mental shortcuts, such as defaulting to the cheapest option or avoiding the purchase altogether to avoid potential loss.

There is another aspect to this, and that’s with regard to buying processes involving multiple people within the corporate environment. The group making the decision, and the roles within that group, can be complex. Often the person discussing the purchase with you is not the final decision maker. Round prices are easier to repeat internally (‘it’s about £25k’), and what gets repeated tends to get approved.

So what should you do with all this?

As must be obvious, some of the advice above is contradictory. On the one hand, precision such as £12,513 is good; on the other hand, rounding to £12,500 is good. So which is it?

The point isn’t “always use .99” or “always remove pence”.

It’s that price endings are a language. And like any language, the right choice depends on what you’re trying to communicate. A pricing test I ran using Charm pricing increased sales dramatically – for those specific products, sold through the channels that company used, to customers in the relevant market, etc. In a different scenario, such as trying to communicate luxury, the same pricing approach could have reduced sales.

So decide which pricing approach is appropriate for your market, product, circumstances, etc; and as I have said more than once, test it before you totally commit to it.

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