price is more complex than many might think Apple is well known for selling their products with three options. In 2010 for example, in the United States the iPad was available with three storage capabilities – priced at $229, $299 and $399. The result was that the $299 option far outsold the other two. This […]

price is more complex than many might think Apple is well known for selling their products with three options. In 2010 for example, in the United States the iPad was available with three storage capabilities – priced at $229, $299 and $399. The result was that the $299 option far outsold the other two. This suggests three things: People do not always buy the cheapest; 9 is a magic number when it comes to price; The $399 option is a DECOY driving people to the middle option. These findings also highlight: The fact is that price is more complex than many think, and should never be treated as simply an accounting matter. Price is more related to psychology, or behavioural economics, than it is to traditional economics and core principles such as supply and demand. Price impacts on the perception of value, and is used as a determinant of quality,…