What technique involves changing prices to create a perception of value?

Psychological pricing is a technique that involves setting prices in a way that creates a perception of value in the mind of the consumer. This approach capitalizes on the idea that certain price points can evoke emotional responses or suggest to customers that they are getting a better deal. For instance, pricing an item at $9.99 instead of $10 can make it seem significantly cheaper, even though the difference is only a cent. This pricing strategy aims to influence consumer behavior and decision-making, fostering the impression of savings or value.

In contrast, other pricing strategies focus on different aspects of pricing without necessarily emphasizing perceived value. Dynamic pricing adjusts prices based on demand and availability in real-time, while cost-plus pricing involves adding a standard markup to the cost of goods sold. Market penetration pricing is a strategy aimed at gaining market share quickly by setting prices lower than competitors. While these strategies may impact perceived value in some contexts, psychological pricing specifically targets the mental and emotional aspects of consumer perception.