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Psychological pricing (also price ending or charm pricing) is a pricing and marketing strategy based on the theory that certain prices have a psychological impact. In this pricing method, retail prices are often expressed as just-below numbers: numbers that are just a little less than a round number, e.g. $19.99 or £2.98. [ 1]
Psychological pricing is a range of tactics designed to have a positive psychological impact. Price tags using the terminal digit "9", ($9.99, $19.99 or $199.99) can be used to signal price points and bring an item in at just under the consumer's reservation price. Psychological pricing is widely used in a variety of retail settings. [39]
A loss of $0.05 is perceived with a much greater utility loss than the utility increase of a comparable gain. Loss aversion is a psychological and economic concept, [ 1] which refers to how outcomes are interpreted as gains and losses where losses are subject to more sensitivity in people's responses compared to equivalent gains acquired. [ 2]
Psychological level. In finance, psychological level, is a price level in technical analysis that significantly affects the price of an underlying security, commodity or a derivative. Typically, the number is something that is "easy to remember," such as a rounded-off number. When a specific security, commodity, or derivative reaches such a ...
Pricing designed to have a positive psychological impact. For example, there are often benefits to selling a product at $3.95 or $3.99, rather than $4.00. If the price of a product is $100 and the company prices it at $99, then it is using the psychological technique of just-below pricing.
The Price Sensitivity Meter (PSM) is a market technique for determining consumer price preferences. It was introduced in 1976 by Dutch economist Peter van Westendorp. The technique has been used by a wide variety of researchers in the market research industry. The PSM approach has been a staple technique for addressing pricing issues for the ...
List of cognitive biases. Cognitive biases are systematic patterns of deviation from norm and/or rationality in judgment. They are often studied in psychology, sociology and behavioral economics. [ 1] Although the reality of most of these biases is confirmed by reproducible research, [ 2][ 3] there are often controversies about how to classify ...
Anchoring effect. The anchoring effect is a psychological phenomenon in which an individual's judgments or decisions are influenced by a reference point or "anchor" which can be completely irrelevant. Both numeric and non-numeric anchoring have been reported in research. In numeric anchoring, once the value of the anchor is set, subsequent ...