E-Commerce Power by Jason G. Miles

Author:Jason G. Miles
Language: eng
Format: epub
Publisher: Morgan James Publishing
Published: 2021-03-14T16:00:00+00:00

Pricing Principle #8—Price Is Relative

Somewhere during our childhood, we get an understanding of what things should cost, what we can afford, and what range of spending we can comfortably operate in. It gets baked into our brains, like a permanent record of what’s possible. A candy bar should cost 25 cents because that’s how much they cost when I was twelve (in 1982). We learn about pricing slowly and in odd ways.

Your Background Creates Anchors

We each perceive the “expensiveness” or “inexpensiveness” of an item depending on our context. So, prices are relative—the same price can be expensive for some people, but inexpensive for others. Anchors creating context could include:

•Customer age

•Customer geographic residence

•Customer cultural group

•Customer annual income—poor, middle class, upper class, 1%.

The reason relative prices impact us differently is because our minds create what is known as an anchor. Anchors are formed by the memory of a prior price or simply knowing about the price of a related item. The anchor amounts are what is “fixed in our minds.”

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