psychological pricing

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psychological pricing

an approach to PRICING which pays particular attention to the effect which a product's PRICE has upon consumers' perceptions of the product. This has a number of dimensions, including:
  1. the charging of very high prices for certain (generally high-quality) consumer products to convey an impression of product exclusiveness. High prices may appeal to particular high-income customers who wish to possess the product as a status symbol (‘conspicuous consumption’);
  2. the charging of high prices for technologically sophisticated consumer products in order to convey an impression of superior product quality and performance.

    This may play an important part in the buying decision when consumers are ignorant about the comparative properties of the brands of the product facing them, and thus use price as an indicator of quality;

  3. the charging of a price for a product which is just below a ‘round figure’ threshold price (for example 99 pence rather than £1) so as to create an impression that the product's price is considerably below the threshold;
  4. the charging of relatively low prices for frequently purchased and familiar products so as to create or reinforce an impression of value for money.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
References in periodicals archive ?
There is no doubt that psychological pricing works, however it is also important for an estate agent to consider the impact certain pricing can have on national portals such as Rightmove.
Baker, Pan and Wurgler (2012) provide a further extension of the psychological pricing of M&A transactions explaining the reference point theory, while, Alexandridis et al.
* Psychological pricing: set your price at $9.95 instead of $10 to create a lower-price appearance.
Retailers can also utilize psychological pricing, which involves manipulating the price points of items slightly to give the perception of a less expensive price point.
Black and Scholes (1993) and Cox, Ross and Rubenstein (1979) are inadequate to value M&A transactions as these models do not include psychological pricing factors like risk aversion and optimism.
Ramazan deals also attract consumers because of the psychological pricing strategy.
These data are consistent with customary pricing, which has also been called psychological pricing (Friberg and Matha 2004; Kreul 1982) or odd pricing (Stiving and Winer 1997).
The author divides the information into four basic sections (customers and markets, the offer, approaching customers and promotion) and offers streamlined explanations of concepts such as branding, market share, segmentation and psychological pricing. Prevalent marketing models such as the Schramm Model of Communication, the Elaboration Likelihood Model and Porter's Competitive Strategies are also analyzed.
Honestly, in a true free market, I don't see anything wrong with psychological pricing. It's just the way American business works.
As the euro will remain a foreign currency for sterling, perhaps using sterling as a comparative example for psychological pricing was a mistake.
Psychological pricing has long been part of their marketing armory.
(1967), "Psychological pricing in the food industry", in Phillips, A.

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