Question

This pricing tactic works because although we can remember the exact price right when we see the price, after a few weeks we forget about the "cents" and focus on the "dollars" which makes us think the price is cheaper than it actually is.a. The 99 principle.b. The forgetful cents principle.c. The cents pricing principle.d. The principle of cents pricing.

Answer 1

Answer: A. the 99 principle

Explanation:

This strategy, often called "charm pricing," involves using pricing that ends in "9" and "99."

With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention. For example, your brain processes $3.00 and $2.99 as different values: To your brain $2.99 is $2.00, which is cheaper than $3.00.

How is this technique effective? It all boils down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called "the left-digit effect in price cognition." They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains unchanged (e.g., $3.60 to $3.59).”