Definition
The charm pricing effect (ending-digit pricing) is a pricing strategy in which a seller sets the last digits of a price to something like 9 or 990 won, so the price feels cheaper than it really is. The actual discount is only a few dozen or a few hundred won, but sales are seen to rise especially when the leftmost digit changes.
It's only a 100-won gap, so why does it look cheaper?
Walk around a supermarket or browse an online shop, and you'll see 9,900-won shirts far more often than 10,000-won ones. Convenience stores and electronics shops are plastered with price tags ending in 900 or 990 won. The real gap between the two prices is just 100 won, not even enough to buy a pack of gum.
But the impression our eyes and brain get is completely different. We read numbers from left to right, so we are overwhelmingly influenced by the first digit we meet.
The moment 10,000 won becomes 9,900 won, a five-digit number shrinks to four digits, and we unconsciously feel that the price has dropped a whole level. 10,000 won registers as a "ten-thousand-won" item, while 9,900 won sticks in the mind as a bargain in the thousands. Dropping 3,000 won to 2,990 won works the same way. Here the leftmost digit really does shrink from 3 to 2, so the item looks one step cheaper. By changing a tiny 100 won, companies try to lower the shopper's mental barrier to buying.
It's a shortcut the brain uses to save energy
Our brains burn a huge amount of energy making countless decisions every day. So when we face a complicated price tag, we don't carefully weigh every digit. We take the fastest, most efficient mental shortcut and reach a conclusion.
Once we check the leftmost digit, we tend to skim the remaining digits or cut them out of our minds entirely. Psychology and behavioral economics call this the "left-digit effect," because the left digit shapes our whole judgment. That's why studies suggest the effect barely shows up when the first digit stays the same, such as changing 2,800 won to 2,790 won.
On top of that, a price ending in 9 sends consumers a special signal. When people see a price ending in 9, they sometimes assume without thinking that the seller cut their profit to the bone and gave the biggest discount possible. A seller can barely lower the real price and still leave the impression of giving customers a deal.
To be more precise: luxury stores rarely use 9
So if you slap a 9,900-won or 99,000-won style ending on every product in the world, will it sell like hotcakes? Surprisingly, not at all. Depending on the product and the sales strategy, the result can be the opposite.
A price tag ending in 9 gives a positive feeling of value and practicality, but it also gives off the impression of a cheap, mass-market item. That's why top luxury brands and premium hotel services, which live on quality and reputation, almost never use prices ending in 9. They believe it can backfire by eroding trust in quality.
In fact, at high-end brand stores it is hard to find a tag like 9,990,000 won. They tend to use relatively tidy numbers instead. For practical everyday goods, a final 9 opens wallets. But for expensive items that sell prestige and trust, clean, round numbers give shoppers greater satisfaction and confidence.
Common misconceptions
The charm pricing effect happens because shoppers are bad at adding and subtracting and get fooled.
It isn't a lack of math skill. When the brain processes visual information quickly and efficiently, it focuses its attention on the first digit on the left.
Where you meet it
Convenience store lunch boxes or drinks with price tags like 4,900 won or 1,990 won.
U.S. gas station signs where the price ends in a string of 9s, like $3.99.
Online shop items priced at 9,900 won with shipping included to nudge buyers into deciding.
In one sentence
It's a psychological pricing strategy that lowers the ending digits to 9 or 990 won, so shoppers focus on the front digit and feel the price is cheaper.