What pricing strategy is often used when a company wants to attract consumers by appealing to their perception of the product's value?

Psychological pricing is a strategy that leverages the perceptions of consumers regarding value, often setting prices at levels that seem more attractive, such as $9.99 rather than $10.00. This approach takes into account not just the cost of the product but also how consumers perceive that price in relation to its value. By pricing a product just below a round number, businesses can create an impression of greater value and increase sales volume.

This strategy is particularly effective because it taps into the cognitive biases of consumers, influencing their purchasing decisions by making them feel they are getting a better deal, despite the minimal difference in price. For instance, when consumers see a price ending in .99, they are often more likely to perceive it as significantly cheaper than a whole number, hence encouraging them to make a purchase.

While options like promotional pricing focus on temporary discounts or offers to boost sales, and cost-plus pricing is based strictly on adding a markup to the cost of production, psychological pricing specifically targets consumer perception to drive demand. Value pricing also emphasizes offering quality products at a fair price, but it does not engage the psychological aspects of pricing as explicitly as psychological pricing does.