Price Illusion:


Price illusion refers to the phenomenon where individuals perceive changes in prices differently based on various contextual factors rather than on absolute value.


  1. Contextual Perception:
  2. Price illusion is heavily influenced by contextual factors such as the presence of sales or discounts, comparison with previous prices, and the general pricing environment.

  3. Relative Price Perception:
  4. Consumers often compare prices of products with similar alternatives available in the market, resulting in the perception of a product as cheaper or expensive relative to these alternatives.

  5. Psychological Anchoring:
  6. Price perception can be anchored by initial reference points or suggested retail prices, leading consumers to judge prices as fair or unfair based on these anchors.

  7. Price Presentation:
  8. The visual presentation of prices, including the use of formatting, font size, and discounts, can influence how individuals perceive the value and attractiveness of a product or service.

  9. Temporal Perception:
  10. Consumers may perceive prices as lower or higher based on the timing of their purchase, such as during sales events or seasonal promotions.