Question

Define Psychological Pricing and provide a real-life example.

Hint:

Prices ending in 9 (₹99, ₹199) are common examples of psychological pricing.

Answer 1

Concept: Psychological pricing is based on consumer perception, where prices are set to influence buying behavior.
Answer:
Psychological Pricing is a pricing strategy in which prices are set in a way that appeals to customers’ emotions and perceptions rather than logic. It creates an illusion of a lower price or better value.
For example, a product priced at ₹99 instead of ₹100 appears significantly cheaper to customers, even though the difference is minimal. This is known as odd pricing and is widely used in retail stores.
Such pricing influences customer perception and increases sales by making products seem more affordable.