Psychological pricing
Setting prices to use how people read numbers rather than their exact value: charm prices ending in 9 or 99, anchoring with a higher reference price, decoy options, and round prices as a premium signal. Shoppers read prices left to right, so 4.99 feels closer to 4 than to 5. The effects are real but small and depend on context, and overused charm pricing can make a brand look cheap, which is why luxury brands use round numbers.
Where it's used
Used in retail, e-commerce, SaaS pricing pages and menu design. Good for A/B testing price points and plan layouts, but test on your own audience, because the effect varies by category and brand position.
How to calculate it
Revenue per 1,000 visitors = visitors × conversion rate × price
Worked example
Illustrative numbersAn online shop A/B tests $10 against $9.99 for the same product, with 1,000 visitors in each version. The $10 version converts at 4.0%, the $9.99 version at 4.6%.
Orders at $10
1,000 visitors × 4% = 40
Revenue at $10
40 orders × $10 = $400
Orders at $9.99
1,000 visitors × 4.6% = 46
Revenue at $9.99
46 orders × $9.99 = $459.54
Revenue uplift
($459.54 - $400) ÷ $400 = 14.9%
What it tells you
One cent less brought 15% more revenue in this test. Run the same test on a premium product and the round price may win.