Odd Pricing

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Odd Pricing

NEW YORK -- Ever try to pay for one gallon of gasoline with exact change? It's impossible, because gas is priced with an extra nine tenths of a cent.

Partial cent pricing dates back to the 1920s when gas was cheaper and a penny meant more to drivers, according to a report in The Wall Street Journal. Rayola Dougher, an analyst at the American Petroleum Institute, says it was basically a "marketing gimmick" to make gas look cheaper.

"It made the gas sound like it cost a penny less than it was," Roy Littlefield, executive vice president of the Service Station Dealers of America (SSDA), told The Journal.

With competition still fierce, the practice continues. The price of gasoline is the most widely seen "and most comparable" of any product, says Jonathan Cogan, a gas price expert at the U.S. Energy Department.

Studies show that products priced with odd number endings sell better. Consumers read prices from left to right, leaving off the last digits. People see $1.399 and think $1.30, instead of the actual price, $1.40, the report said.

Iowa briefly banned partial cent pricing of gas in the 1980s. The legislature undid the law in 1989 after gas station owners complained they were at a disadvantage to stations across the state line in Nebraska.