Is Psychological Pricing a Pricing Strategy or a Loophole?

Ever wondered why prices end in 90 or 99? You can find ‘99’ price tags everywhere, from your bar of chocolate at the supermarket to your monthly gym subscription. So why do products have prices ending in 99 rather than rounded up to the next figure? Or every time you see a discount, a ‘limited-time offer,’ or a ‘best deal’—are you making the choice, or is it being made for you? Welcome to the loophole of pricing strategies. These strategies are often viewed by consumers as straightforward business tactics, but they also operate on a psychological level that subtly manipulates consumer behaviour. This research paper dives into the concept of psychological pricing, examining how businesses leverage subconscious biases to influence purchasing decisions. Key strategies such as charm pricing, price anchoring, compromise effect, scarcity illusion, loss aversion, transaction utility theory, and decoy pricing are analysed and discussed with real-world case studies. The findings below suggest that businesses use psychological triggers to maximize sales, trapping the consumer in an endless cycle of shopping.