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Comment by YVoyiatzis | Hacker News Reader

Actually, the .99 price-point started as a clever way to prevent theft, manage inventory, and keep track of sales. The idea was that pricing something at $1.00 might tempt a cashier to pocket the bill, but pricing it at $0.99 meant they’d have to open the register to give change, reducing the risk. Back then, most registers didn’t print receipts.

This method also helped with inventory control. For example, if the total sales for the day ended in .56, it meant 44 (or 144) items were sold, no matter how many customers bought them.

This pricing strategy stuck around because it was really useful for running a business smoothly.

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> This method also helped with inventory control. For example, if the total sales for the day ended in .56, it meant 44 (or 144) items were sold, no matter how many customers bought them.

That seems like bollocks, who cares about a technique for tracking total number of any items sold? That isn't helpful for inventory management at all? And even if you had only a single product, or you totalled sales separately for some reason (and inexplicably by sale price rather than just tallying sales), you could then just divide by the price, you don't need to coerce the total into being a tally mod 100.

>who cares about a technique for tracking total number of any items sold?

Pre-digital calculator salesmen? Time is money and being able to do a quick mental math can be helpful before doing a more detailed inventory

>you could then just divide by the price, you don't need to coerce the total into being a tally mod 100.

That's why they gave more than one reason. Why laser focus on criticizing a single one?

> Pre-digital calculator salesmen?

For what purpose? Say you're a salesman of 7 different products/SKUs; you sold 186 products today. What do you do with that information?

You're still hyper fixating on one single point. And I'm not a businessman. I imagine businesses never do one thing for one reason like software functions.

Bankers can tell a lot from a security standpoint based on seemingly frivolous data. Maybe it's the same logic here. If you end every day swelling exactly XX0 products, something is amiss. It at least prompts a deeper investigation, since running through weeks of receipt/data takes more time pre-computer.

I'm 'hyper fixating' on the point that seemed nonsense to me, that I commented on, and that you replied to.

?? It lets me know how effective a product I'm offering is being sold? What do you mean?

I guess you can think of it as a "checksum". If your inventory count doesn't match the sales sum, something is wrong

Interesting, but not true.

Registers that don't record receipts also don't record when it's opened. Even if they did, cashiers could forego opening it and provide their own pennies in order to pocket the 0.99 difference.

The .99 pricing is typical black & white smiling mid-atlantic accent gray flannel suit slicked hair over-jovial grinning 50s/60s mad men salesman stuff.

> Actually, the .99 price-point started as a clever way to prevent theft, manage inventory, and keep track of sales. The idea was that pricing something at $1.00 might tempt a cashier to pocket the bill, but pricing it at $0.99 meant they’d have to open the register to give change, reducing the risk. Back then, most registers didn’t print receipts.

Wouldn't the extra labor required offset any potential savings? (More time per transaction means you need to hire more cashiers to keep checkout line length down.)

It's a small form of security, and we've traditionally traded some convinence and efficiency to mitigate theft.

Yes but in this case it's a weak form of security, for a significant efficiency loss. I'm sorry but I don't really believe that most businesses would look at this tradeoff and decide it makes sense.

We're talking about a pricing scheme conceived in a time right around the birth of the assembly line. And right around the stock market crashed.

Everything wasn't about raw profits once upon a time. So a small piece of mind makes sense.

this feels apocryphal and appears to be one theory of many[1] (also - just take out an extra penny during the next transaction). to quote cecil adams "trying to find out who invented [psychological pricing] is like trying to find out who invented the hat."[2]

1 - https://en.wikipedia.org/wiki/Psychological_pricing

2 - https://www.straightdope.com/21341889/why-do-prices-end-in-9...

I don’t know if this is true or not, but it’s clever and interesting regardless.

Was the $.99 price point really invented at a point in history before sales taxes came to be established? Round prices have never been convenient because it always come out to $1.07 1.08 1.09 something like that with a mix of state and local tax added

Plenty of places in the world (most/all of Europe at least) include tax in the .99 price. If I go to the check out to buy something that is priced at £9.99, I will pay £9.99 as the 20% is already accounted for.

Both of those use cases seem like they'd only work if there were no sales tax to collect.

Sane countries (almost everywhere but the US), have sales-tax included in the consumer-listed prices.

As you point out, sales tax isn't pre-calculated in the US, and yet .99 prices are ubiquitous here.

There's a lot underneath your comment.

For instance, when you buy something and get a receipt - it is not for you the customer. It is to keep the employee honest. If there is no receipt, it might not have been entered into the cash register.

Now with electronic payments a lot of this risk has gone away and receipts are becoming optional.

Also, I remember some people telling me in their stores, the last digits of a product were secret code. Like ending in .23 (i made this up) meant the product was being discontinued and only stock on hand was available. There were other codes for other things.

Costco does that. If a price ends in .97, it's been discontinued. If a price ends in something that isn't a 9, usually means it's on sale. You can look up the exact details.

in china, businesses are required to use government managed software that will automatically handle taxes and print on government issued receipt paper. for a while the receipt paper included a scratch field where consumers could win something in order to motivate them to demand a receipt. at least once we won more than we spent. some 2digit amount in dollars.

In Brazil we have an entire PKI based receipt system, every single purchase generates a full listing record straight to a government database sent in realtime (or later, in "contingency mode" as called, if having network issues). A lot sales also include the customer's personal tax-id... no privacy for any purchase at all. It's required for everything, even a liter of milk from the corner bakery.

This is also the electronic version of an older, paper based system, called Nota Fiscal (lit Fiscal Receipt) ... legally, every single item carried around the country must have one. Of course this was/is a major enabler for selective police action against "undesirable people" moving trivial stuff from a home to another, etc.

The government-managed (or at least government-certified) software is not just China, but also large parts of the EU.

> government-managed (or at least government-certified

Huge difference.

to be fair, i don't know how much different the chinese management is from a european certification system.

we were told to use specific software. and for sure that software is created by some company that may or may not be government owned. i don't know if there was any choice since, as is typical with foreigners, someone will just tell me their recommendation and not try to explain the differences between choices, unless they matter. ie: just go with the default.

i did have the impression that different regions use different software at least.

i expect that potentially in european countries there are multiple competitors for the same software, but i don't know that either.

so for all i know the amount of choice and control in china could be the same as some countries in europe.

I think the point is less ownership and more remote access.

ah, well, what i had in mind by the term government managed had nothing to do with remote access. i was only thinking about the ownership of the software, not how it works.

Price endings were absolutely a thing at circuit city back in the early 2000s. .98 .97 and.95 all had meanings. I can’t remember how they mapped but it was something similar to “vendor discontinued, CC discontinued” and something else maybe ha

Customer facing reasons for receipts in no particular order:

- Expensing purchases to their employer or self-owned business

- Record of sale to be used in returns

- Reconciliation of spending with cheques or credit card statements

- Budgeting and accounting generally

My suspicion is that most business owners don't care about ANY of that.

even returns - it might actually be enough friction that returns would go down.

for example, why would a donut shop give receipts?

I have a friend who recently opened a bar. He did cash in the beginning, but finally got the electronic payments for the bar installed. He immediately caught a bartender stealing.

He noticed that at the start, the bartender got a lot of tips. But when the electronic payment system went in, the tips were not anywhere near as much. He reviewed everything and found the people in the bar do not tip well.

What the bartender was doing was selling drinks and putting many of the cash sales entirely in the tip jar. When the electronic payment system went in, he wasn't handling as much cash and the lower tipping rate showed up.

> for example, why would a donut shop give receipts?

Because of members of a social club, whose turn it is to buy the donuts, wants to have it to give to the treasurer so that it can count against their monthly dues.

The more general answer is because, at this point in time, a receipt is universally expected. I'm not denying that businesses have internal reasons to hand them out, and keep a copy, I'm saying that customer demand played a role at the time this convention was established. They've become increasingly useless on the customer side, except for business expenses, where they remain vital.

It might be because an electronic payment system can accept exact tender and / or the options to tip defaults to lower payment options / easier to hide a small tip to your friends

With cash few have exact change and the table can see what you give. This leads to rarely asking for change back and putting higher amounts as it ups your social ranking.

This effect is easier to see in a bar.

Often you need to keep track of dollar per unit sold as some staff will overpour

Although employees should get the benefit of the doubt (and he did in the beginning), the camera footage eliminated all doubt.

> pricing it at $0.99 meant they’d have to open the register to give change, reducing the risk

How does opening register reduce risk?

I think it's more like "have to record the sale and produce a receipt". The customer wants their penny, so you have to ring it up.

Now if you steal a dollar, your totals at the end of the day are off a dollar.

But, if you take the dollar with no recorded sale, your counts are good.

But OP's comment also says

>Back then, most registers didn’t print receipts.

Registers that keep track of how much should be in the till, based on the day's sales, those have been around quite a long time. NCR got big enough in 1912 that they had antitrust trouble. Their big selling feature was tracking the till.

https://www.asc.ohio-state.edu/economics/pdf/marvel/ncr.pdf

Seems unlikely, given that the inventory control idea falls apart as soon as you suppose there’s items priced below $0.99.

This would be decades ago, so many useful products would indeed be below 99 cents.

This does absolutely nothing since the cashier can just have pennys in their pocket.

I'm skeptical about the theft aspect. Couldn't a dishonest cashier just keep some pennies on-hand and pocket the bill anyway?

How is it useful is any of this today? Everyone uses point-of-sale systems and credit cards.

You've obviously never worked in retail of any kind if you think the number of cents at the end of the day is useful for anything.

And you're "correcting" an article which has citations, based on what? A story you heard? Citation needed, buddy.

Come on.

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