CPP Psychology of Pricing 2

Question 1

A retailer prices a product at $49.99 instead of $50.00. Which psychological pricing principle does this primarily leverage?

Accepted Answer

Charm pricing / left-digit effect

Answer

Prestige pricing

Answer

Price bundling

Answer

Odd-even pricing symmetry

Question 2

A consumer is told that a wine costs $90 per bottle and reports it tastes better than when told it costs $10. This phenomenon is best explained by:

Accepted Answer

Price-quality heuristic

Answer

Sunk cost fallacy

Answer

Decoy effect

Answer

Framing effect

Question 3

Which pricing tactic involves presenting a high-priced option first to make subsequent options seem more affordable?

Accepted Answer

Anchoring

Answer

Penetration pricing

Answer

Value-based pricing

Answer

Price skimming

Question 4

A software company offers three subscription tiers: Basic ($9/mo), Pro ($19/mo), and Enterprise ($99/mo). Most customers choose Pro. What pricing strategy is likely at work?

Accepted Answer

Compromise effect / center-stage effect

Answer

Price skimming

Answer

Dynamic pricing

Answer

Yield management

Question 5

Prospect theory suggests that the pain of losing $100 is psychologically greater than the pleasure of gaining $100. How should a pricing professional apply this insight?

Accepted Answer

Frame price increases as avoided losses rather than added costs

Answer

Frame discounts as gains rather than losses

Answer

Always use round numbers to minimize loss aversion

Answer

Price products at a premium to signal exclusivity

Question 6

A luxury brand deliberately keeps prices high and avoids discounting. This strategy primarily leverages:

Accepted Answer

Prestige pricing and the Veblen effect

Answer

Odd-even pricing

Answer

Price bundling

Answer

Penetration pricing

Question 7

What is the 'just noticeable difference' (JND) concept's primary application in pricing?

Accepted Answer

Determining the smallest price change consumers will actually detect

Answer

Setting prices that end in 9 to appear cheaper

Answer

Establishing a price anchor before negotiation

Answer

Measuring consumer surplus at different price points