VAT decrease leading to strange prices.

[flobadob]

Has anyone noticed that since the VAT rate in UK was dropped to 15% all the prices of goods are all over the place where when it was 21% they nearly all were something and 99p. What's the story with that, when it was 21% did all the prices just magically work out to the nearest 99p. And does that mean that from now on prices will end with 68p and 71p etc., or will shops eventually just go back to the 99p?

[Earth-Angel]

When was V.A.T. rate 21% ?

[flobadob]

Sorry, mixed up with the irish rate there, I meant 17.5%.

[factor-fiction]

There is not necesarily a strong link between the final price and the level of VAT. Shpos want to make prices look a sattractive a possible whilst generating sufficient profit and as we know there is a strong preferene for charging prices that end in 99p - for example �4.99 sounds better than �5.05 and any customers focus on the whole pounds part of the price and perceive something that's reduced from 2.99 to 1.99 as being half price! So a shop may want to sell something at say �10.30 to generate its profit but may feel forced to sell it at �9.99. The recent VAT cut which should in theory bring prices down by 2.1% won't make any difference in these cases. Some shops are making a point of reducing prices to things like 9.79 but it's unlikely that this willbecome the norm.

[Postdog]

The 99 pence anywhere has nothing really to to with VAT. It is a throwback to before the cashless society (ie using cards) and goes back even further to pre decimal, when things might have been 19 shillings and 11 pence.

Marking at just under a pound does have a psychological effect, and say, �19.99 pounds does at first glance seem better than �20.00 BUT the main purpose was to give change and so record the transaction through the till. Without that the person on the till could, in theory, simply pocket the �20 and no-one would be any the wiser until too late.

[GlasgowGiles]

Sorry, postdawg. You are perpetuating an old myth. The prices ending in 99p. are just to make it appear cheaper. No other reason.

[Postdog]

Ignore that, I'm right. It was started by the shoe industry many many years ago and caught on. As said, the primary reason was to reduce theft by employees.

Mind you, this has nothing to do with your question does it.

[factor-fiction]

I'm sure I've seen articles in reputable journals explaining that it's an urban myth that prices were set at 99p or 99c or 19s/11d in order to force sales staff to put the transaction through the till. This BBC article suggests thjere was no real evidence to support this- the real reason has always been that it makes items look cheaper.

[factor-fiction]

I'm sure I've seen articles in reputable journals explaining that it's an urban myth that prices were set at 99p or 99c or 19s/11d in order to force sales staff to put the transaction through the till. This BBC article suggests thjere was no real evidence to support this- the real reason has always been that it makes items look cheaper.http://news.bbc.co.uk/1/hi/magazine/7522426.st m

[eash]

I think we should just round up or down to the nearest pound. Would make life so much easier and get rid of the 1 and 2 pence pieces.