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
Which experimental finding best supports the use of 'sale' tags even when the markdown is minimal?
Answer: Reference price contrast increases perceived deal value independent of actual savings
Research shows that the mere presence of a 'sale' label and an original reference price elevates perceived value, even if actual savings are negligible.
A B2B software vendor quotes an annual contract price as '$9,600/year' versus '$800/month.' Research suggests pricing it monthly will:
Answer: Decrease perceived cost through unit partitioning and likely increase sign-ups
Unit partitioning makes the per-unit cost feel smaller and more manageable, often increasing purchase likelihood even at an identical total price.
A grocery store places its most expensive olive oils at eye level and cheaper options on the bottom shelf. This layout primarily exploits which consumer tendency?
Answer: Anchoring using premium as initial reference
Eye-level placement of premium products sets a high price anchor, making mid-range options encountered next seem more reasonable by comparison.
Scarcity messaging such as 'Only 3 left in stock!' primarily works through which psychological mechanism?
Answer: Reactance and loss aversion
Scarcity triggers psychological reactance (fear of losing access) and loss aversion, increasing urgency and perceived value of the item.
Consumers often spend more when paying by credit card than with cash. The psychological concept that explains this is:
Answer: Mental accounting pain of payment decoupling
Cash payment is psychologically 'painful' because the loss is vivid and immediate; credit cards decouple the purchase from the pain of payment.
A company adds an 'extreme' top-tier product with a very high price that it doesn't expect to sell in volume. The primary goal is most likely to:
Answer: Serve as a decoy to boost sales of the second-tier product
A super-premium 'hero' SKU can serve as an anchor and decoy, making the second-tier product appear as a sensible value by comparison.
Which of the following is an example of 'pain of paying' reduction in subscription pricing?
Answer: Charging annually upfront so payment and consumption are temporally separated
Annual upfront billing decouples the payment event from ongoing consumption, reducing the per-use sense of cost that monthly billing reinforces.