External reference prices are those prices currently offered at other retail outlets, whereas internal reference prices are those prices retrieved by the consumer from memory.
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Humans naturally evaluate and assess value based on these comparisons, and the consumerist world is no different. The majority of consumers will only feel justified in making a purchase if the item's price is reasonable given its perceived worth.
The cost a client deems appropriate to pay for a good or service is known as the reference price. When determining pricing points for its products, a company should consider the customers' perceptions of reference prices.
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