“…the average person treats a price ending in .99 as if it were 15 to 20 cents lower.”
The tendency is called left-digit bias, when the leftmost digit of a number disproportionately influences decision-making. In this case, even though the real difference is only a penny, research shows that, to the average person, $4.99 seems 15 to 20 cents cheaper than $5.00 – which results in selling 3 to 5 percent more units than at a price of $5.00"
It’s not just pennies / cents. It applies when going from $99 to $100…$399 to $400…$999 to $1000 etc.
If you’re selling a car and you want $4000 for it then it’s best to list it for $3999 or $3995. Sure, you’re giving up $1 or $5 but you’re making that price look much more attractive due to the left-digit bias.