How much would you pay to sleep well? For someone who sleeps like a log on a 10-year-old, $400 mattress, the answer is probably: not much. For people who don’t sleep well, or don’t get enough sleep, the answer can … Read More
psychology
Value Trade Offs in the Mind of the Customer
The limiting factor on price is the differential value the customer perceives. By definition, that perception takes place in the customer’s head. Research by Marketing Professor Alexander Chernev of Northwestern University’s Kellogg School of Management and cited in Forbes suggests … Read More
When the Price is the Value, Can You Price too High?
The value of many luxury items is that they have no intrinsic value, but their conspicuous consumption demonstrates the wealth and social standing of the buyer. You can therefore charge much higher prices, mainly just by charging higher prices. (You … Read More
Do Rational People Buy Overpriced Things?
Jeff Heuer has a great blog called Micromotives– The Science & Art of Decision Making. A recent post ponders “Would it ever be rational to buy something you know to be overpriced?” Jeff writes that “Research on hedge fund trading … Read More
The Price of Wine– Not About the Wine
What determines the price of wine? Not necessarily taste or quality, according to the Journal of Wine Economics. A summary in The Economist notes: The relationship between the price of a bottle of wine and its taste is weak, according … Read More
The Importance of Framing
This article from the LA Times discusses the importance of reference points in assessing the “fairness” of prices. The article notes: If you ask college students if the average price of a textbook is more or less that $7,000, they … Read More
Seth Godin: Cheaper is the Last Refuge…
In a recent post, Seth Godin responds to someone seeking help persuading her boss to lower prices. Seth notes …perhaps she ought to consider raising prices and using the extra money to create a remarkable experience… Cheaper is a short … Read More
Toilet Paper for the Rich– You Can Always Make an Everday Item a Luxury Item
If people will pay $4 for coffee, why not $5 for toilet paper? (Actually, I can think of plenty of sensible reasons why not, but what fun would that be?) I think they should introduce another line with silver and … Read More
Everyone Wants Comfort, but Will They Pay for It?
The Middle Seat travel column by Scott McCartney at the Wall Street Journal has been discussing Boeing’s plans to outfit their new 787 in either 8 or 9-across coach seating. Naturally, the 8-across seating gives each passenger more room, while … Read More