Pricing and the psychology of consumption

1. Is there any relation between consumer psychology and pricing?
2. What is the relationship between price and consumption?
3. How does price affect consumption?
4. Which pricing strategy is based on psychology of consumer?
5. How the psychology of pricing affect the consumer buying behavior?

Is there any relation between consumer psychology and pricing?

The idea behind psychological pricing is that customers will read the slightly lowered price and treat it lower than the price actually is. An example of psychological pricing is an item that is priced $3.99 but conveyed by the consumer as 3 dollars and not 4 dollars, treating $3.99 as a lower price than $4.00.

What is the relationship between price and consumption?

The link between pricing and consumption is clear: People are more likely to consume a product when they are aware of its cost.

How does price affect consumption?

Payments that occur at or near the time of consumption increase attention to a product's cost, boosting the likelihood of its consumption. By contrast, payments made either long before or after the actual purchase reduce attention to a product's cost and decrease the likelihood that it will be used.

Which pricing strategy is based on psychology of consumer?

Psychological pricing is a strategy that uses pricing to influence a customer's spending or shopping habits to make more or higher value sales. The goal is to meet a customer's psychological need for something, whether that's saving money, investing in the highest quality item, or getting a “good deal.”

How the psychology of pricing affect the consumer buying behavior?

If the product is already in abundance in the market, then pricing will definitely play an important role because the increase in price will discourage customers from buying it. Similarly, if prices are lowered under such market conditions, then consumers will increase the amount that they purchase significantly.