Customary Price
In many cases, a particular product has a customary price that people remember as reasonable. Prices tend to stick at these prices even when the seller's prices increase. Any attempt to exceed a strong customary price may result in a dramatic drop in sales.Substitution Price
Many goods have substitutes that will grab sales if prices rise beyond a certain point. For example, if the price of red carnations rises above the price of red roses, demand for carnations may suddenly drop at that point.Perceptual Price
People may perceive similar prices as completely different. For example, a home that's asking $990,000 may feel much cheaper than $1,000,000.| Overview: Price Points | ||
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Definition | A price that supports a certain level of demand that drops dramatically if you charge any more. | |
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