Psychological pricing

“A pricing strategy that specializes in inflicting

psychological effects on consumers.”
It is a marketing strategy based on utilizing
particular pricing techniques to form a
psychological impact on consumers.
For example, a customer may likely to
pay Rs.299 for a pair of a pair of
shoes and may not like to buy the
same pair if it priced at Rs.300
Techniques of psychological pricing are

 Odd pricing: Odd pricing is the most commonly

used pricing technique in the world. it’s simple
mind illusion. For example: a price of $4.99 is
used instead of a rounded price of $5. This creates
a powerful difference between its real value and
its perceived value and therefore boosts up sales.
 Prestige pricing: Prestige pricing is the opposite
version of odd pricing, as the aim of this strategy
is to price its products at a rounded number point
say $100 instead of making it look cheap at $99.99.
By doing so not only contributes to maintaining
brand reputation but in fact, encourages more purchases.
 Buy One, Get One Free: This is one of the most popularly
used pricing technique in the world. It is a pricing tactic
which involves customers paying full price for one item
and getting another for free.
 Comparative Pricing:
A marketing technique in which the price of one
offer is directly contrasted with the price of another
offer in the same opening of offers.
For example, a person walks into the clothing
department and buys a suit. The sales assistant offers
him a $700 Tuxedo suit and another even more luxurious
Tuxedo suit for $800.He chooses the latter option.
 Product Bundle Pricing:
“Combining several products and offering the
bundle at a reduced price.” For example: McDonalds
offer a combo pack includes Medium coke, Medium
fries, The chosen burger. This is more price-effective
for the consumers compared to buying each of the item
individually. Obviously, the company would earn more
money this way from 3 items than to earn from 1 item alone.
Captive pricing
Compaies that makes products that must be used
along with the main product are using captive
product pricing.
Captive products are products that are a necessity
for use with other products, often a “host” product.
Marketers will often set low prices for the host
product and set high markups on the captive
products. Examples of captive pricing are razors,
video game consoles, theme parks, printers etc.
Examples of Captive Product Pricing

 Razors:
Razors are a great example of captive product
pricing because there is the base product, the
razor handle, and the cartridges, the captive
product. When you go to a retailer, you have
likely noticed that purchasing a razor handle
bundled with a limited number of razor cartridges
costs a lot less than the bundled cartridges themselves. 
 Printers:
Printer is the base product, and the ink and paper are
the captive products. You can usually find a printer for
as low costbut you can pretty much bet that the ink
and paper will cost you just as much each time you run
out.