
Confessions of the Pricing Man: How Price Affects Everything

The objective of the trader at the bazaar is to obtain the maximum price from every buyer. These efforts can fail, of course, for a number of reasons, such as a bluff by a buyer or the exchange of information among buyers. If one buyer tells another how low the price was for a certain item, the revelation sets a price anchor that the bazaar trader
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When a seller packages several products together and charges a total price less than the sum of the individual product prices, it is called price bundling
Hermann Simon • Confessions of the Pricing Man: How Price Affects Everything
The rebate provides the customer with additional positive utility . This means that the net utility is greater when one sees a price of $100 and receives a 25 % discount than when one pays $75.
Hermann Simon • Confessions of the Pricing Man: How Price Affects Everything
Two of the most powerful intangible benefits we willingly pay for every day are convenience and peace of mind. Rail passengers saved a lot of time and frustration because they could purchase a ticket on any stretch at any time at a discount of 50 %, knowing that they have likely chosen the least expensive way to get to their destination.
Hermann Simon • Confessions of the Pricing Man: How Price Affects Everything
The moral here is that one should not lose sight of quality in pursuit of a better deal. Admittedly, that is easier said than done.
Hermann Simon • Confessions of the Pricing Man: How Price Affects Everything
Durables: In this case the demand curve s reflect a yes-no decision of each individual customer. People buy one washing machine, one smartphone, one camera, or one PC. Or they don’t buy at all. The demand curve is the sum of the individual decisions. Nondurables: In this case, buyers often buy several units at a time, depending on the price. Think
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If competitors really do cut their prices, then Company A suddenly has two problems. First, it will sell fewer units of the old products than originally expected, which means that it does not deplete its stocks. Second, it may have permanently destroyed the price level and may need to introduce its new version at a lower price.
Hermann Simon • Confessions of the Pricing Man: How Price Affects Everything
The hard truth is that you need to double your volume after the price cut to keep your profits at $10 million. Anything less will reduce your profits.
Hermann Simon • Confessions of the Pricing Man: How Price Affects Everything
If the government intervenes through regulation, taxation, or other barriers, the result is almost always an imbalance between supply and demand .