Psychological Influence on Price

Sensitivity

z
Prepared by:
JOMARIE M. FELICIA
BSBA MM3
Meaning:
z
▪ Psychological pricing is a pricing and marketing strategy
based on the theory that certain prices have a
psychological impact. In this pricing method, Retail
prices are often expressed as just-below number :
Numbers that are just a little less than a round numbers.
 LEARNING OBJECTIVES
z

▪ At the end of this report you will be able to identify the

following

▪ What are the factors that influence price sensitivity

▪ What are the psychological aspect of pricing

▪ How does psychological pricing increase sale

▪ Which factor affect prices

▪ Why is psychological pricing used

The factors that affect prices Sensitivity
z

▪ Product type

▪ Reference price

▪ Switching cost

▪ Product uniqueness

▪ Ease comparison

▪ Brand fairness
What is Psychological Aspect of Pricing
z

▪ Psychological pricing is the practice of setting prices

slightly lower than a whole number. An example of
psychological pricing is setting the price of an automobile
at $19,999, rather than $20,000. This type of pricing is
extremely common for consumer goods.
How does Psychological pricing increase sale
z

▪ Means by pricing a product strategically that encourages

your customers to buy your products. This is a scheme of
converting customer’s impulsive buying nature into sales.
The customer often falls prey of psychological pricing in
this manner.
Which factor affects Prices
z
▪ The factor that affect prices are supply or demand
changes, If something is in demand and supply begins to
shrink, prices will rise. If supply increases beyond current
demand, prices will fall. If supply is relatively stable,
prices can fluctuate higher and lower as demand
increases or decreases.
Why is psychologgical pricing used
z
▪ It is a power of psychology to push consumers to spend.
It’s a joint effort of pricing, marketing, and sales to build
an attractive offer that captures consumer attention and
makes a product so desirable the shopper can’t wait
another day to buy it