That wouldn't apply if everyone included tax in their prices. In this case, the item would just be $1.10.

If the business really thinks they will lose money by pricing over a dollar, then yes, they would have to take that hit. But they are already taking that hit if the "real value" is $1.02 for example.

It's just a price/demand curve. They would simply have to optimize it differently.

There's a reason everything is priced at some variety of .99, 99.99, 999.99, etc: it sells better than 1.08, 108, 1080, etc.

My point is getting the consumer to eat the sales tax on top is just a wise trick by US businesses, and nothing to do with complexity.

That's been debunked. Every consumer just auto-rounds in their head. Companies keep doing it because of tradition more than anything else.

It is a wise trick, and exactly the job of government -- to prevent the public from getting tricked by businesses.

> That's been debunked. Every consumer just auto-rounds in their head.

Has it?

I'm searching around and not coming up with much that says that's the case.

On the other hand, here are some recent-ish links that suggest it still works:

- https://www.rd.com/article/why-prices-end-in-99/

- https://capitaloneshopping.com/research/pricing-psychology-s...

This one suggests it depends on the consumer, with "highly numerate" consumers being less likely to think the price is lower (but presumably also less common in the customer pool):

- https://business.missouri.edu/about/news/99-ending-prices-ar...

Edit: searching for "charm pricing" specifically suggests it does work, but I suppose maybe there's some bias on the context in which people use that term.