What type of pricing strategy uses prices that typically end in 7 or 9?

The correct choice is rooted in the understanding of how consumer psychology influences pricing perceptions. Psychological pricing is a strategy that considers the emotional response of consumers to prices. Setting prices that end in 7 or 9, such as $9.99 or $7.99, is a common practice because it creates a perception of value and affordability. This pricing strategy plays on the tendency of customers to react more favorably to prices that appear lower than they actually are. For instance, a price of $9.99 is often perceived as significantly less expensive than $10.00, despite the minimal difference.

This approach can increase sales, as it taps into the psychological aspect of consumer behavior, leading to a perception that they are getting a better deal. Ultimately, psychological pricing aims to make products seem more appealing, thereby incentivizing purchases.

Understanding this strategy within the broader context of pricing can help retailers optimize their pricing decisions to align with consumer expectations and enhance overall sales performance.