Psychological pricing in action - the power of £0.01

We’ve heard much in recent weeks about the growing popularity of the £1 discount stores (Poundland etc). But what happens when a competitor comes along and offers everything at a much more psychologically-attractive price of £0.99?...

A great little story here in the Daily Mail tells the story of a competitive battle between two discount stores in Poole, Dorset. The Pound Land store was having a good time, until the psychological pricing experty entrepreneur came along. The result - a 70% drop in sales revenue for the shop that whose prices were suddently uncompetitive - by a penny.

We are told that the Pound Land store has closed, but has been replaced by an alternative discount store. So it sounds like a price war is likely to break out in Poole.