ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The 99 price ending is so effective because of what we call the left digit effect. The way we look at a price is from left to right. And therefore, the impact of the left-most digit, in this case, 4, is the highest. This makes you as a buyer perceive that the price is in the 400s and not 500.

Detailed explanation-2: -Psychological pricing is a strategy that uses pricing to influence a customer’s spending or shopping habits to make more or higher value sales. The goal is to meet a customer’s psychological need for something, whether that’s saving money, investing in the highest quality item, or getting a “good deal.”

Detailed explanation-3: -Psychological pricing is the business practice of setting prices lower than a whole number. The idea behind psychological pricing is that customers will read the slightly lowered price and treat it as lower than the price actually is.

Detailed explanation-4: -Definition: Charm pricing refers to the use of prices ending in the number nine because of the “left-digit bias, ” a phenomenon in which consumers’ perceptions and evaluations are disproportionately influenced by the left-most digit of the product price.

Detailed explanation-5: -Odd price odd pricing means using odd numbers for the end digits of a price. For example, a business might choose to price its product $9, 99 instead of 10$ to make the product appear much cheaper. It relies on the assumption that consumers focus only on the first digits when they look at the product price.