POLOKWANE – Which feels cheaper, R99 or R100? The answer seems obvious. R99 is cheaper, but the difference is only R1.

Mathematically, the two prices are almost identical. So why does R99 often feel like it belongs in a different price category?

Part of the answer lies in how quickly our brains process numbers.

Research suggests that prices just below a round number can make a product seem cheaper and can make people slightly more likely to buy it.

The left-digit effect

When we shop, we aren’t usually stopping to calculate every price carefully. We scan shelves, compare products and make quick decisions.

Our brains use shortcuts to do this. One of those shortcuts appears to be giving more weight to the first digit of a price than the digits that follow it.

The left-hand digits can carry more weight in our initial impression of a price, so R99 remains in the R90s in our minds, while R100 has crossed into a new three-digit category.

It sounds silly when you put it that way. After all, your brain knows that R99 is only R1 less than R100, but when we are making quick decisions, we don’t always process the entire number equally.

In other words, your brain can do the maths; it just doesn’t always bother.

Why R99 works

Part of the reason we associate R99 with a bargain may be because we have spent decades seeing prices such as R9.99, R49.99 and R99.99 presented as deals.

That means the effect may not only be about the way our brains process numbers, but also what we have learned those numbers mean.

R99 doesn’t work for everything

There is an interesting twist to the story, and this is where the popular idea of psychological pricing gets a reality check.

Studies looking at grocery and retail prices have found that the effect varies depending on the product, the brand and the shopper.

If you have never bought a particular product before, you may not know whether R99 is actually a good price. Without a previous price to compare it with, the price itself can influence your impression of whether you’re getting a deal.

If you regularly buy the same product, however, you have your own reference point. You might see R99 and think: “Hang on, wasn’t this R89 last month?”

Suddenly, the R99 doesn’t look quite so cheap, and that’s where things get interesting when prices start going up.

What happens when R99 becomes R109?

Imagine you have been buying something for R99 and the price rises to R109.

The actual increase is R10, but psychologically, something else may have happened: the product has crossed the R100 mark.

The same idea applies when R199 becomes R209, or R999 becomes R1 099.

Inflation matters, of course, but crossing a familiar price barrier can also affect how we perceive the increase.

This is one reason a price change can sometimes feel different from what the maths alone suggests.

Sometimes, the difference between R99 and R109 is less about the R10 in your pocket than what your brain thinks that number means.

So, are we being tricked?

Not exactly. The research doesn’t support the idea that shoppers see R99 and suddenly lose the ability to understand maths and money.

Instead, it suggests something much more ordinary: our brains take shortcuts, and retailers understand those shortcuts.

R99 is not dramatically cheaper than R100, but it can look cheaper, feel cheaper and, in some circumstances, make us a little more likely to choose it.

So the next time you think you spot a ‘deal’, remember: the retailer may just be counting on your brain to take a shortcut.