Why Do Gas Prices End in 9/10 of a Cent?

Why Do Gas Prices End in 9/10 of a Cent?

Why Do Gas Prices End , in 9/10 of a Cent?.

CNN reports as gas prices continue their meteoric rise, drivers have looked up at pump price boards angrily.

According to data from AAA, the average gas price in the United States now stands around $5.02 per gallon.

So why do gas stations advertise prices ending in 9/10 of a cent?.

It may seem odd and unnecessary, but there is history and strategy behind fuel prices ending in 9/10 of a cent.

Fractional prices became commonplace in the early 20th century.

As states across the country started taxing fuel sales to construct and maintain highway systems. Since the average cost of gas at the time was close to 10 cents per gallon, .

Gas stations began adding fractions of a cent in their pricing in order to pay taxes levied against them.

Gas stations are also known to set prices ending in 99 cents, known as "just-below pricing.".

"Just-below pricing" can trick consumers into believing they're getting a better deal.

To consumers, a price such as 19.9 cents feels substantially lower than the price of 20 cents.

, Robert Schindler, professor of marketing at Rutgers School of Business-Camden, via CNN