Identify and describe six types of psychological pricing.

Question

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The Answer is 1. Charm Pricing: This is when prices are set just below a round number, such as $9.99 instead of $10.00. This is based on the psychological effect that consumers perceive the price to be lower than it actually is.

2. Prestige Pricing: This involves setting high prices to create the perception of high quality and exclusivity. Luxury brands often use this strategy to appeal to a certain demographic.

3. Odd-Even Pricing: This is when prices are set as odd numbers (e.g. $7.99) or even numbers (e.g. $8.00) to appeal to different consumer perceptions. Odd prices are often associated with discounts and value, while even prices are associated with quality and luxury.

4. Bundle Pricing: This involves offering multiple products or services for a single price, which can create the perception of getting a better deal and encourage consumers to make a purchase.

5. Multiple Unit Pricing: This is when products are priced based on the quantity purchased, such as "3 for $10" or "Buy one, get one free." This encourages consumers to buy more in order to get a better deal.

6. Reference Pricing: This involves comparing the current price to a reference point, such as a previous price or a competitor's price, to create the perception of a good deal. This can influence consumers to make a purchase based on the perceived value.

Identify and Describe Six Types of Psychological Pricing