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7:11pm on Wednesday, 10th February, 2010:
If you wanted to sell a meal in a canteen with around a £4 price, how much would you charge?
Well, if you wanted to encourage people to eat in your canteen, you'd price it at £3.95, or perhaps £3.99 if you wanted to make a tiny bit more money. People are used to seeing these prices, but they still fall for the illusion that "it's only £3".
If you had long queues, you might charge a straight £4. The till can process your payment quicker because there'll only be one coin in the change. It's a nice, round number, and people won't think you're trying to trick them into thinking they're paying less than they are.
If you wanted long queues, and wanted to screw customers for every last penny, you'd charge £4.05. This would entail giving most customers 95p in change, which would lengthen the queues, and if this put off more than one person in twenty then you'd lose all the gains you'd get from charging the extra 5p.
Guess which approach the Square 3 Restaurant at Essex University takes?
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