The Psychology of Pricing - What's the best price to charge?

I recently read an article written by Michael A. Jones. Here's an summary of what he's found to be true when it comes to pricing.

Much research has been done regarding pricing levels and the numbers that seem to be more appealing to consumers. Of all the numbers, the number 7 scores very highly in a customer's perception.

Here are the findings in an easy reference list:

Prices Under $10

End the price with 99 cents rather than 95 cents. It doesn't make any difference to customer perception whether the price ends in 99 or 95 cents in this low price range so make every cent you can. If you are able, set your price at $7.99, and take advantage of the power of the number 7.

Prices Between $10 and $100

Here a different set of psychological elements come into play. We are now dealing with a higher price range and to finish a price with 99 cents seems as if the marketer is trying to squeeze just that little too hard. 75 cents and 95 cents seem to be more acceptable. Again, if the first figure can have a 7 in it, e.g. 17.95, 27.95, etc. it seems to work better.

Prices Over $100

With higher priced items, forget about the fractions. A clean round figure works best. And remember to incorporate the number "7" into your pricing (e.g. $127, $147, etc.).

Special Note for Service Businesses

To offer a service for $59.95 an hour doesn't sound right. Round it off to $60, or whatever figure you set for your charges. Customers don't expect an 'on sale' kind of mentality when it comes to paying for professional services.