.0005% difference in margin. People's brains interpret $19.99 as significantly cheaper than $20, but as a marketing iniative, whole digit pricing may intice people looking for honest, straight forward pricing.
But don't kid yourself, adding a penny per transaction is not going to benefit the bottom line in the way your thinking.
"People's brains interpret $19.99 as significantly cheaper than $20"
Is this really true though? Is there some study that supports this? To me it seems simpler for the brain to round up to $20 when thinking about the price. I certainly wouldn't remember if something was $18.99, $19.95, or $19.99. They're all just $20 to me.
Yes, there are a ton of psych and neurological studies that back up this practice. It is one of those blind-spots in your brain. You peg on the $19 part of $19.99. If you stop to rationally consider things then $19.99 and $20 are effectively the same, but for most casual purchasing decisions you do not actually apply a significant amount of intellectual rigor. You may think that you consider $20 and $19.99 to be the same, but study after study shows that what you think that you are thinking about and what your brain is actually doing are not the same.
Interesting, I always feel like 19.99 = 20, but that is probably because of how my Dad taught me to add and multiply quickly by doing so rounding first then backing off from there.
But don't kid yourself, adding a penny per transaction is not going to benefit the bottom line in the way your thinking.