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Why is it 9/10ths?

From:  "Glenith"

Why is it always x dollars and 9/10 per gallon of gas? Why not 4/10 or something

Seb was the first to come up with this: 

Think about it: which is and sounds cheaper...$10 or $9.99? The second obviously, and it's a very old ploy for marketers. With gas, dropping down a fraction from the dollar amount above makes the gas appear cheaper. Point made, they've no reason to drop another for a greater loss.

TB reported in with this: 

There are several theories to this. One is that is a marketing ploy in the gas price wars that go back more than 70 years. It is similar to other retail pricing like $19.99 rather than $20, or $29.99 rather than $30. It gives the appearance of being less expensive. I'm not sure when and where it originated. The other reason may be due to taxes, the 1933 increase in federal gasoline taxes from 1 cent per gallon to 1.5 cents could have encouraged the start of fractional pricing for gasoline. Why the continuation of the 9/10s-of-1-cent pricing? The pricing is built into the gasoline pumps, and it would cost the industry, and individual retailers, too much to change them.

Jon added this: 

The gasoline corporation has to feel the need to scam everyone that purchases gasoline. By making it the highest amount the can in fraction form out of ten (9/10) then they can get an extra dollar everytime someone buys 9 gallons of gas.

Todd researched this: 

Because gas companies are trying to make money. By throwing that extra 9/10ths of a cent on the price it sounds 1 cent cheaper yet it is close to being 1 cent more. Say for instance that gas is $1.00 9/10ths per gallon (which is truly 1.009 per gallon) This is very cheap for gas but it will prove my point. Now if you bought 1 gallon, it would cost you $1. Now if you by 2 gallons you would expect it to cost $2. But it cost $2.02 because the 1.009 and the other 1.009 added give you 2.018 which in money rounds to 2.02 So by doing this the gas company is making two cents. This may sound like a small amount but most people buy more than 2 gallons and the .009s added up to make more cents. So if you bought 20 gallons of
gas at $1 per gallon it would end up costing $20.21 roughly. For the millions of people buying gas this extra money turns into thousands of dollars. You may ask why not just make it $1.01 per gallon instead of $1.00 but this would make it sound like more money than!it is. It is just like stores charging 9.99 instead of 10.00. Nine
sounds a lot better than ten and the same applies to gas companies. Its just the
gas companies sneaky way of making more money.

Rimmer our "outback" friend responded with this: 

I believe this is a hangover from ancient marketing lore which states that if you charge $4.99 for something people are so stupid they will think you
are way cheaper than the guy down the road who actually charges $5.00 for
the same thing! The nerve! That's why you see cars advertised for $29,999.99
'cause its gotta be *much* cheaper than buying a $30,000.00 car. (I'm from
Australia and these are typical prices, really, I'm not kidding.) Specifically why 9/10ths and not 4/10ths? Because that way they make the
maximum amount of profit without actually having to admit they are charging you $5 for the item. Enjoy being patronized.

Jelly Bean:  Why it it always x dollars and 9/10ths a gallon? Its an old jewish sales trick. People think they're spending less than they really are. Its the same with every thing. Companies advertise for $24.99 or $9.99--people have a better chance to buy because they think they are spending less.

irvin hill shared these thoughts: 

It's marketing! 9/10 is a close as you can logically get before getting to the next number.
In the past I think it had more of an effect to get people to think in terms of 49 cents instead of 50 cents when they see 49.9 cents.
Todays consumers I think see it as 50 cents, but the old marketing "trick" is still with us.
Kinda like 99 cents! Most would call it a buck!
It's one marketing toll that's been long outdated, but who wants to be the first to charge 50 cents? Because it would be more than 49.9 cents (and if you bought 10 at 49.9cents, you'd save a whole penny as opposed to 10 at 50 cents!)

JR summed it all up with this: 

The 9/10 cents on the end of every gallon of gas is part of the federal tax. Since it has to be rounded to the next highest cent the government is actually collecting the full cent most of the time (unless you buy exactly 9 gallons or 18, etc..). So the man is collecting the whole cent even though they claim they only get 9/10.

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