False economy: Why we find a price tag that ends in 99p hard to resist

It's one of the oldest tricks of the retail trade.

Yet a study has found that the tactic of ending prices with '99p' still fools most shoppers.

French researchers demonstrated that lowering the price of a pizza from 8.00 euros to 7.99 euros boosted sales by 15 per cent.

A team of psychologists, lead by Dr Nicholas Gueguen of the University of South Brittany, studied more than 1,200 diners in a pizzeria in Lorient, Brittany, over six weeks as the prices changed.

The menu included five pizzas alongside fish and meat dishes.

In the first two weeks, all the pizzas were priced at 8.00 euros.

In the second two weeks, the Pizza Valencia was priced at 7.99 euros, but the others stayed at 8.00 euros. In the last two weeks, all the pizzas cost 7.99 euros.

When the prices were identical, 35 per cent of customers ordered the Pizza Valencia.

When it was one cent cheaper, it was ordered by nearly half the customers, the researchers report in the International Journal of Hospitality Management.

In the final stage, when all the pizzas cost 7.99 euros, there was no difference in sales.

He added that the results could be explained by the ' underestimation mechanism', where ' consumers pay less attention to the end of the price'.

Professor Richard Wiseman, psychologist at Hertfordshire University, said retailers use an armoury of tactics on customers.

Studies show that shoppers purchase more in buy one, get one free promotions compared with half-price offers, he added.

Other tricks include putting expensive brands at eye level and placing essentials such as milk and bread a long way from the entrance so shoppers have to walk past as many goods as possible to reach them.