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

Charm pricing exploits the left-digit effect, where consumers anchor on the leftmost digit ($49 vs. $50), perceiving a larger difference than actually exists.

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

The price-quality heuristic leads consumers to infer higher quality from higher price, sometimes altering the actual perceived experience.

Question 3

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

Accepted Answer

Anchoring

Answer

Anchoring sets an initial reference point (the high price) that biases all subsequent price evaluations downward.

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

The compromise effect causes consumers to avoid extremes, gravitating toward the middle option as a 'safe' choice.

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

Loss aversion means framing a price increase as avoiding a larger loss (e.g., 'avoid a $200 penalty') is more persuasive than framing it as a gain.

(CPP) Certified Pricing Professional Practice Test

(CPP) Certified Pricing Professional Practice Test

CPP Psychology of Pricing 2