Practice Test Geeks(CPP) Certified Pricing Professional Practice Test
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Psychology of Pricing Flashcards

7 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Psychology of Pricing flashcards as text

  1. A gym offers a 'free first month' promotion. After cancellation rates spike in month two, what psychological concept explains why members may feel they already got their value?

    Answer: Mental accounting and sunk cost

    Mental accounting leads consumers to categorize the free month as 'prepaid value already received,' reducing perceived cost of canceling.

  2. Consumers perceive a $10 discount on a $25 item as more attractive than a $10 discount on a $250 item, even though the dollar savings are identical. This is explained by:

    Answer: Weber's Law / proportional discounting

    Weber's Law predicts that perceived value is relative to the base price; 40% off $25 is far more salient than 4% off $250.

  3. Which of the following best describes the 'decoy effect' in pricing?

    Answer: Adding an inferior third option to make a target option seem superior

    The decoy (asymmetrically dominated) option is deliberately inferior to one choice but not the other, steering consumers toward the preferred target.

  4. A car dealership advertises monthly payments of $299 instead of the total price of $17,940. This tactic exploits:

    Answer: Payment segregation / temporal discounting

    Breaking the total into smaller periodic payments reduces the perceived magnitude of the expenditure through temporal discounting and unit bias.

  5. A consumer who paid $500 for a non-refundable concert ticket attends despite feeling ill because 'I already paid.' This behavior exemplifies:

    Answer: Sunk cost fallacy

    The sunk cost fallacy causes people to factor in irrecoverable past costs when making current decisions, even though those costs are economically irrelevant.

  6. From a behavioral economics standpoint, why do $0 shipping offers dramatically increase conversion rates beyond the value of shipping savings?

    Answer: Zero is a special price that eliminates transaction cost anxiety entirely

    Ariely's 'zero price effect' shows that free offerings trigger an emotional response disproportionate to their economic value, removing perceived risk entirely.

  7. A pricing manager is introducing a 15% price increase. To minimize consumer resistance using psychological principles, they should:

    Answer: Bundle the increase with a visible product improvement or added feature

    Linking a price increase to a tangible product improvement shifts consumer attention from the price change to the added value, reducing resistance.