Modern pricing heuristics in a cost-of-living crisis

Against a challenging economic backdrop for consumers, a number of old and new pricing heuristics – cognitive shortcuts that help people make decisions about how to spend and what to buy – have moved centre stage.

Once, setting the right price was relatively simple. Not so now. In fact, when the impact of the cost-of-living crisis, tipping into recession and consumer behaviours are combined, it’s never been harder, which means understanding the ins and outs of modern pricing heuristics has never been more important.

Historically, pricing was justified by traditional levers – such as the quality of a product’s ingredients, packaging, and brand equity – then adjusted to secure listings and shelf rotation to drive volume. Some months later, a TV campaign and a price discount might then follow – to reinvigorate volume and/or bring in...

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