What’s the reason behind the $x.99 and $x.95 price tags?

The real reason for this was to force cashiers to open the cash drawer and give change, thereby making it harder for them to steal from the shop owner by simply pocketing the sale. It has persisted over time as there’s also a psychological benefit where $24.99 looks cheaper $25. Sales have increased by as much as 20% by making this one simple change.

An old discussion on .99 vs .00 pricing on 37 signals.
More discussion on Fogcreek.