A shirt priced at $19.99 is an example of which pricing tactic?

• A. Penetration Pricing
• B. Skimming Pricing
• C. Psychological Pricing
• D. Cost-Plus Pricing

Answer: (C)

Psychological pricing is about shaping how customers perceive a price. A shirt priced at 19.99 uses a charm-ending that makes it feel cheaper than 20.00, which can trigger a perception of getting a better deal and encourage quicker or more purchases. This tactic focuses on perception and potential demand, not on changing the true cost or the base calculation.

Other pricing methods are different in aim: penetration pricing purposely sets a very low price to win market share, skimming pricing starts high to maximize profits from early buyers, and cost-plus pricing adds a fixed markup to cost without considering how the price is presented to customers.