Pricing Strategies : Psychological 1.3.3
Psychological pricing - occurs when a firm sets a price for the product in order to entice the customer into making a purchase by making it sound cheaper than it actually it is. A common example of psychological pricing is when a firm charges £9.99 rather than £10.00 ADVANTAGES 1) Larger purchases This practice encourages larger purchases. For instance, a customer comparing two products, £15 and the other at £18.99; may purchase the higher priced item because it "seems" fairly close. The theory behind psychological pricing suggests, in this case, that the buyer would perceive only roughly a £3 difference in the products rather than a nearly £4 difference. 2) Encourages impulse buys Psychological pricing is intended to persuade irrational buyers who don't logic out the fact that there is just a one pence difference between £9.99 and £10. Given that premise, this technique also helps motivate impulse buys on sales items a merchandise displays in or near th...