There’s an interesting article over at Fast Company on The Inevitability of $300 Socks, which talks about the formerly incredible notion of paying $300 for jeans. Remember when $50 jeans were “designer”? The authors, Dan and Chip Heath, argue that … Read More
psychology
Reference prices
An alert reader sent in an article from the Wall Street Journal (free for one week) called The Psychology of the $14,000 Handbag, which delves into why stores offer, well, $14,000 handbags, and what this means for the rest of … Read More
5 Ways NOT to do Promotions
From Mental Floss, here are 5 Ballpark Promotions that Went Wrong. Example number 1: 10-cent beer night.
The Math of Multiple Discounts
Recent research by Akshay Rao and Haipeng Chen confirms that people have a hard time processing a sequence of percentage discounts. For example, if you have a $100 item at 20% off, and then take another 20% off, what is … Read More
Abusive Pricing?
Jason Calconis has a funny post about a hotel charging $2.80 for a cup of coffee. I’m not sure how much you get to complain about coffee when you have a $400 hotel room, but the point is legit. People … Read More
A Really Important Part of the Demand Curve
Josh Kopelman over at the Redeye VC blog has a great post (see image from post– click for larger image in original post) on the importance of the part of the demand curve when the price moves from “free” to … Read More
The Price of a Good Night’s Sleep
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
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