Psychological prices are prices that are only slightly lower than the next round amount. 9.99, 6.49 and 1995 are all examples of psychological prices. There are numerous studies ascertaining their omnipresence in the retail market, making it a veritable pricing strategy. It has first appeared at the end of the 19th century. Retail managers often use psychological prices because they believe that they create a positive effect on consumers in that consumers perceive the prices to be significantly lower than their round-amount counterparts. However, in spite of the fact that the subject has been studied by economists for almost 100 years, there is still no conclusive answer as to whether and how psychological pricing contributes to increased sales. This work studies the consumer’s perspective on psychological prices and the psychological and decision-making processes that govern their purchasing behaviour. A brief history of psychological prices is given, after which their controversial points are addressed: the causes for psychological prices, their effectiveness and effects. Three hypotheses for the causes of psychological prices are given: level effects, image effects and prospect theory. Studies researching the effectiveness of psychological prices are not unanimous: some studies showed their positive effect, some were inconclusive and some even highlighted that under certain circumstances psychological prices may have a negative effect on sales.