What is the focus of psychological pricing?

Psychological pricing centers on the idea of leveraging consumers' perceptions and emotions regarding prices to influence their purchasing behavior. This strategy aims to create an illusion of value, making products appear more attractive or affordable. For example, a product priced at $9.99 may seem significantly less expensive than one priced at $10.00, despite the negligible difference in actual cost. By using this tactic, retailers can tap into consumer psychology, making them feel they are getting a better deal, which can ultimately drive sales.

Other concepts like maximizing profit through cost-cutting primarily focus on operational efficiencies and reducing expenses rather than consumer perception. Encouraging bulk purchases may involve discount strategies but does not directly align with psychological pricing's objective of shaping the consumer's view of value. Simplifying price structures is more about clarity and ease of understanding rather than manipulating perceived value. Therefore, the essence of psychological pricing is to craft prices that maximize perceived value, thereby enhancing demand and sales through consumer psychology.