Party Package Deluxe - Price unknown (pirate or princess theme).
Custom made theme relevant birthday cake.
Several snacks and drinks included.
Lunch included.
Service to pick up kids at home and take them back home after the party.
Gift package including candy, a pirate princess doll and pirate princess decorated cupcakes.
Birthday girl or boy gets a booklet with party pictures and a DVD made of the party.
Prior to adding Party Package Deluxe to our current assortment, making it available for consumers, my manager wants me to determine the right price for the party package and investigate the effects adding this third package at a certain price may have on our company.
To fulfill my manager's request, in this essay I will take several psychological factors into account to determine the right price for Party Package Deluxe. I will elaborate on how prices may influence consumers to buy more of our company's products and will give concrete pricing advice for Party Package Deluxe.
Right pricing is fair pricing.
Following Thaler's (1985) transaction utility theory, consumer behaviour and corresponding willingness to pay depends not only on whether the price is a good price for a certain product or service (acquisition utility), it also depends on the perceived fairness of the price (transaction utility). Transaction utility theory states that the total utility, or satisfaction, of a purchase is the sum of acquisition utility and transaction utility; total utility will have significant effects on willingness to pay. This means that if a price is perceived as a good price for the product or service and the price is perceived as fair for that type of product or service, consumers will experience positive transaction utility and may engage in purchasing. Negative transaction utility, or transaction disutility, will occur when consumers perceive the price of a product as unfair; consequently consumers may disengage from purchasing.