price threshold is a price point which triggers a pronounced change in sales whenever it is crossed. You might think of a price threshold as a kink in the demand curve . This price-threshold effect normally happens at round price points, such as $1, $5, $10, or $100. That is why many prices lie just under those thresholds, very often ending in a 9.

Price has another big advantage over marketing instruments such as advertising or sales . Price changes usually can be implemented very quickly. In contrast, it can take months or years to develop or change a product. Advertising campaigns and budgets also require substantial time to implement and even longer to show their full effects.

each individual unit has its own price point. Under the nonlinear price structure above, the hiker drinks five beers and spends $16.50, or an average of $3.30 per glass.

How a price looks in relation to other prices can have a strong influence on a consumer’s behavior. An identical price of $10 can trigger widely different reactions, depending on whether it is the highest, lowest, or middle price in an assortment. Likewise, the number of alternatives in an assortment can exert a strong influence on customers’

Superior value is a must: Premium pricing will work over time only if a company offers superior value to customer.

The less a buyer knows objectively about the quality of the products and prices in an assortment, the stronger the pull of the “magic of the middle” will be.

We are constantly making decisions about whether something is worth our money, or trying to convince others to part with their money.

One such consequence: prospect theory shows that it is not only the net utility that matters to an individual, but how that net utility comes about.

So I went to the home improvement store and found a large assortment of locks, priced in a range of $4–$12. What did I do? On the one hand, I didn’t require a high level of security which would warrant the purchase of one of the expensive locks. On the other hand, I didn’t trust the quality of the cheaper locks. So I chose one from the middle of