Question

Sears offers a craftsman radial saw for $499.99, under the presumption that consumers see the craftsman radial saw as priced at "something over $400" rather than "about $500." this is an application of what pricing strategy?

Answer 1

This is an application of psychology pricing. Consumers tend to perceive odd prices as lower than they are. This causes people to round down instead of up to the next monetary unit.