Dag runs a hardware store. He learned that customers process the price of $9.99 as significantly lower than the price of $10.00 because of the reduced digit count in the price point. Accordingly, he follows this rule to set up the prices for all products. Dag uses a ________ strategy.
A) psychological pricing
B) one-price strategy
C) variable pricing
D) everyday low pricing (EDLP)
E) high/low pricing

Question

Quizplus · Accepted Answer

Dag is using psychological pricing, which is a strategy that takes advantage of customers' emotional responses, cognitive biases, and perceptions to influence their buying decisions. In this case, Dag is using the "charm pricing" or "99-cent pricing" technique, which is a common form of psychological pricing where retailers set their prices with odd-ending numbers (such as $9.99 instead of $10.00) to make the price appear lower than it really is and encourage customers to make a purchase.

Dag Runs a Hardware Store