A price point is a standard retail price used by marketers for several items that vary slightly in wholesale cost but share a similar level of perceived value to the consumer.

Not only do standard prices simplify bookkeeping and product pricing, but they also simplify the consumer’s purchase decision. In addition, they tend to have a psychological appeal for the consumer.

For example, instead of basing the price of four hats on an absolute profit margin, resulting in prices such as $11.96, $11.23, $10.82, and $12.01, the marketer could price all of them at $11.95. Small differences in price, such as $11.95 versus $11.96, tend to have a disproportionate impact on sales.