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Section 10.2 Price
Psychological Pricing
Psychological pricing is a pricing technique used by retailers
to influence buying decisions. It relies on the nature of human
psychology to make prices appear more attractive to consumers. There
are six main types of psychological pricing:
• prestige pricing
• odd pricing
• even pricing
• buy one, get one
• bundling
• price lining
Prestige Pricing
Prestige pricing is setting prices high to convey quality and status.
Customers see a higher price and think the product is better than
lower-priced competing products. High-end fashion designers and car
manufacturers often use prestige pricing.
Odd Pricing
Odd pricing sets the sale price so it ends in an odd number, most
often 5 or 9. The psychology behind this technique is that $9.95 sounds
less than $10.00, even though it is only a five-cent difference. Odd
pricing conveys value.
Even Pricing
Even pricing sets the sale price so it ends in an even number, most
often 0. Prices might be set at $40, $100, or $14,000. Customers see the
even number and think the product is better than one priced for value.
Even pricing conveys quality.
Buy One, Get One
The buy one, get one (BOGO) technique gives customers a
free or reduced-price item when another is purchased at full price.
Depending on the promotion, the items may be the same or similar.
Some stores have buy two, get one promotions and other similar
offers. The BOGO technique conveys savings and value.