I recently participated in the pricing discussion for a product produced by a company I’m an investor in.  The big debate was, “Is $19.95 really better or worse than a $20 price point?”  Those in favor of the $19.95 price thought the nickel off was a huge motivator.  Those in favor of the $20 price point argued that the price point was simpler, cleaner, and would take less thought to process - thus resulting in more sales.
     When a vote was needed to break the tie they asked my opinion.  I told them that I’d share a piece of information with them first (the trainer/educator in me coming out), and then give them my opinion.
     The practice of pricing goods at $19.95, rather than a straightforward $20, began as a theft protection strategy.  Say a pair of gloves was priced at $5. A customer could give the sales clerk a five dollar bill and buy the gloves, at which point the sales clerk could pocket the $5 and the store owner would be none the wiser.  With the gloves priced at $4.95, the sales clerk would be forced to ring up the sale and give the customer a nickel in change and a sales receipt.
    Having shared that little story, I then gave the deciding vote for pricing our product at $19.95.  My reason for this is that what began as a theft protection strategy actually turned out to be a brilliant marketing technique.  A sales price of $19.95 seems and feels like a lot less than $20.  In most studies of this pricing strategy the price of $19.95 worked better than the price of $20.