“If you have to ask how much it costs, you can’t afford it.” (John Pierpont Morgan)
Perceptions of value are not only measurable, but also malleable. Indeed, customer preferences are not as clear, accessible and stable as classical economic thinking predicates. Rather, one’s needs and wants can shift across time and context in ways that researchers in psychology and sociology have been mapping for years, and that business people are only now starting to grasp. One way to understand how customers deviate from “rationality” is to challenge established assumptions at each step of a journey toward (and beyond) a purchase. This lens helps us appreciate how the nuances of human thought and behaviour influence even the most mechanical of pricing decisions. Importantly, while it is true that organisations can exploit anchors, nudges and charms to sway people into buying something that perhaps is not in their interest, a wiser strategy for the long run is to use these concepts to motivate and empower—something critical when organisations invest in quality but face customers who appear disinterested in anything but a lower price.