Which pricing tactic uses price endings to influence perception?

• A. Price Elasticity Pricing
• B. Psychological Pricing
• C. Premium Pricing
• D. Cost-Plus Pricing

Answer: (B)

Price endings that create a perception of a better deal rely on how people read prices psychologically. Ending a price with a just-below amount, like $9.99 instead of $10.00, makes it feel cheaper even though the actual difference is small. This lever taps into mental shortcuts shoppers use—the leftmost digits carry more weight, and the lower “whole number” feels like a bargain, which can boost the likelihood of a purchase without changing the underlying value. It’s a classic example of psychological pricing, used to influence willingness to pay.

This differs from other tactics: price elasticity pricing focuses on how demand changes with price levels; premium pricing sets high prices to signal quality or exclusivity; cost-plus pricing sets prices by adding a markup over cost. So using price endings to shape perception is the hallmark of psychological pricing.