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Psychological Pricing
Psychological pricing

The main contribution of psychology in pricing decisions is the role of perception. People tend to perceive a total product, including core benefits, product attributes, support services and indeed the whole package of benefits the product offers: against this, they compare the price. Since many of the attributes of the product remain unknown until after purchase, price is often used as a surrogate for determining quality.

Psychological pricing relies on emotional responses from the consumer rather than on considered calculation. Higher prices are often assumed by consumers to indicate higher quality, so some firms will use prestige pricing, by which the prestigious nature of the ...

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