Confessions of the Pricing Man: How Price Affects Everything

This approach works even better when you follow up your quantitative questions with two qualitative ones: Why? And what happens next? The “why?” question challenges the respondents to explain their estimates, particularly what happens to the demand if you cut prices and what happens if you raise them. The “what happens next?” question is another wa

Instead of generating additional demand, GM borrowed customers from its future sales and sold those people cars at deep discounts.

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.

Prestige, quality, and design are harder to put numbers on.

“One thing is clear to us: we are not going to pump the market full of cars when there is no demand for them. We always want to produce one car less than the market demands.”

But what does a buyer do when it is something of much lesser value, and this intensive research is not worth the investment? Buyers look for reference points or “anchors.”

In other words, the pain we feel from a loss is greater than the happiness we feel from a gain, even if the magnitude of the loss and gain themselves is equal.

profit and money making to excess and self-indulgence.

Thesis 1: Flat rates mean that the vast majority of light users subsidize a small minority of heavy users. Thesis 2: Flat rates lead with a high probability to lower revenue and profits. From an economic standpoint, flat rate s make no sense.