Confessions of the Pricing Man: How Price Affects Everything

Neuropsychologists have confirmed that the further to the right a digit is, the less influence it has on price perception . According to this hypothesis, customers underestimate prices which lie just under round numbers.

We are constantly making decisions about whether something is worth our money, or trying to convince others to part with their money.

Create value: The quality of materials, performance, and design all drive the perceived value of customers. This is also where innovation comes into play. Communicate value: This is how you influence customers’ perception. It includes how you describe the product, your selling proposition, and last but not least the brand . Value communication also

“That is the worst and yet easiest error. Better be cheated in the price than in the quality of goods.”

The problem with such offers is that over time, the exaggerated list price s lose their credibility. When that happens, they cease to function as proper price anchor s.

The less a buyer knows objectively about the quality of the products and prices in an assortment, the stronger the pull of the “magic of the middle” will be.

pure “price growth” results in profit growth of 50 %, whereas pure “volume growth” increases profit only by 20 %. In reality, these two growth drivers (volume and profit) could come in any conceivable combination (i.e., both go up, one goes up, the other down). If volume and prices both rise, as they did for a time in the oil market, revenue and pr

Multi-person pricing means setting a price for groups of people. The total price will vary by the number of people. Travel agents make offers which allow partners or children to travel at reduced prices or for free. Airlines sometimes will let a second guest or a partner fly at half-price or free. Some restaurants will charge half-price for a dish

For premium and luxury goods, one needs to know whether such prestige effect s exist and whether the demand curve has a part which slopes upward. If it does, the optimal price never lies in that portion of the demand curve. It always lies higher, in the part where the curve slopes downward again. This reinforces a key lesson in this book: you need