, Retail
A kitchen shop sells two nearly identical chopping boards. One is £24.99 and the other is £25. They sell in roughly the same quantities. The owner concludes that pricing psychology is nonsense.
Four aisles away, the same shop sells a knife sharpener at £9.99 and sold it at £10.50 last year. Units are up 22%. Nothing about the product changed.
Both of those results are normal. The difference is that customers compare knife sharpeners and they do not compare chopping boards, and price effects only exist where comparison exists.
The nine works by truncation, not by the penny
The left-digit effect is the mechanism behind charm pricing. People read prices from the left and encode the first digit disproportionately, so £9.99 is filed near nine pounds rather than near ten. The saving of one penny is irrelevant. The change of the leading digit is not.
That predicts where it works. It works hardest where the leading digit changes: £9.99 against £10.00, £19.99 against £20.00. It does very little between £24.99 and £25.00, where the leading digit is the same. If you are going to use price endings, use them at the thresholds, not everywhere by habit.
A nine ending also carries a second signal, learned over decades of British retail: it says value, and by implication it says this might be a deal. That is useful on a promoted line and actively harmful on a premium one.
Which is why round numbers dominate at the top of the market. A £180 cashmere jumper priced at £179.99 looks like it is trying. Round pricing signals confidence and reduces the sense that the price has been engineered. Services behave the same way: an invoice for £1,200 reads as a considered figure and £1,199 reads as a tactic.
The other place charm pricing backfires is with trade and business customers who buy on unit cost and specification. They are not skim-reading a shelf edge. They are putting your price in a spreadsheet next to two others, where £9.99 and £10.00 are the same number with extra typing.
Anchoring is about what sits next to it
A price on its own has no meaning. A price sitting next to another price has a great deal.
That is why range architecture does more work than any individual price. Put three options in front of somebody and the middle one becomes the default, not because it is objectively right but because it is defined by the two either side. Move the top option up and the middle one gets easier to buy. Remove the top option and your average selling price falls, which is the most common unintentional self-harm in small retail: dropping the expensive line because it does not sell much, and then wondering why the mid-range line stopped selling too.
The same applies to the order people encounter prices in. A customer who sees the £340 item first reads £180 as reasonable. A customer who sees the £95 item first reads £180 as expensive. Layout is pricing.
Reference pricing, where you show what something was or what it is worth elsewhere, is the most powerful and the most regulated version of this. More on that below.
Two more effects are worth knowing because they are cheap to use. Framing a discount by the rule of 100: below about £100, a percentage off sounds larger than the cash amount, and above it the cash amount sounds larger. A 20% saving on a £40 item and £20 off a £100 item each sound better than their alternative. And bundling obscures comparison, which is why three for £10 outperforms £3.50 each even when the arithmetic is worse for the customer.
What the law lets you put on a shelf edge
British price display is governed, and Trading Standards enforce it.
The Price Marking Order 2004 requires the selling price to be indicated for products offered to consumers, and for many products the unit price as well, expressed per litre, kilogram, metre or other prescribed unit. The prices must be unambiguous, easily identifiable and clearly legible. The Price Marking (Amendment) Order 2024, which came into force on 6 April 2025, tightened this further, including requirements around unit pricing for promotional prices and for loyalty prices.
Unit pricing constrains presentation in a way that undermines some traditional tactics. If the shelf edge must show price per 100g alongside the pack price, then a bigger pack that is worse value is visibly worse value, and a confusing multibuy is easier for a customer to unpick in three seconds.
The bigger change is in unfair practices. The Digital Markets, Competition and Consumers Act 2024 brought the unfair commercial practices regime into new legislation, with provisions in force from 6 April 2025, enforced directly by the Competition and Markets Authority with the power to impose fines of up to 10% of global turnover without going to court first.
Two things it targets directly matter to a shop. Misleading reference pricing: a "was £40, now £25" claim needs the £40 to have been a genuine price at which the product was offered for a meaningful period, and the Chartered Trading Standards Institute's pricing practices guidance is the practical reference. And drip pricing, where a headline price omits mandatory fees that appear later, which is now expressly addressed.
Fake urgency and fabricated scarcity sit in the same territory. A countdown that resets, or a claim that only two are left when the stockroom has forty, is a misleading practice, not a clever one.
Round the whole architecture, not each ticket
The practical version of all this is not a rule about endings. It is a structure.
Decide your price points first: the handful of numbers your range clusters around, such as £5, £9.99, £15, £25, £40. Customers learn those, and a coherent ladder makes a shop feel navigable. Then place products into them rather than pricing each item from its cost and ending up with £7.63, £11.04 and £18.87 on the same fixture, which reads as a shop that has not thought about anything.
Keep endings consistent within a tier. Mixing £9.99, £10 and £10.50 across similar goods tells customers that the prices are arbitrary, and once they believe that they start asking for discounts.
And accept the limits. Pricing psychology moves the margin on the edges. It does not rescue a range nobody wants, and it is worth less than knowing which forty of your lines make most of your gross profit.
Where this shows up in the game
Shops are part of Business Baron's full game, and e-commerce is free to run. You set your own prices and live with them: cut them and you get volume and customers who leave the moment somebody undercuts you, hold a premium and you keep the people who value it. How far a price moves demand differs from trade to trade.