Question

Pricing policy
Psychological pricing

Answer 1

Psychological pricing is a pricing strategy that businesses use to influence consumers' perception of a product's price. This strategy takes advantage of the fact that consumers often make purchasing decisions based on emotional rather than rational reasons. By setting prices at specific levels, businesses can create a certain perception of value, quality, or affordability in the minds of consumers.

There are several common psychological pricing tactics that businesses use, such as:

1. Charm pricing: Pricing a product just below a round number (e.g. $9.99 instead of $10) to give the perception of a lower price.

2. Prestige pricing: Pricing a product higher to give it a perception of higher quality or exclusivity.

3. Odd-even pricing: Pricing a product with an odd number to give the perception of a bargain, or pricing with an even number to give the perception of prestige.

4. Bundle pricing: Offering multiple products or services together for a slightly lower price than if bought separately, creating the perception of a good deal.

Psychological pricing can be an effective strategy to increase sales and boost profits, but it is important for businesses to carefully consider their target market and the overall branding and positioning of their products before implementing this pricing strategy.