Prada stores carry a few obscenely expensive items in order to boost
sales for everything else (which look like bargains in comparison).
People used to download music for free, then Steve Jobs convinced them
to pay. How? By charging 99 cents. That price has a hypnotic effect: the
profit margin of the 99 Cents Only store is twice that of Wal-Mart. Why
do text messages cost money, while e-mails are free? Why do jars of
peanut butter keep getting smaller in order to keep the price the same?
The answer is simple: prices are a collective hallucination.
In Priceless, the bestselling author William Poundstone reveals the
hidden psychology of value. In psychological experiments, people are
unable to estimate fair prices accurately and are strongly influenced by
the unconscious, irrational, and politically incorrect. It hasn't taken
long for marketers to apply these findings. Price consultants advise
retailers on how to convince consumers to pay more for less, and
negotiation coaches offer similar advice for businesspeople cutting
deals. The new psychology of price dictates the design of price tags,
menus, rebates, sale ads, cell phone plans, supermarket aisles, real
estate offers, wage packages, tort demands, and corporate buyouts.
Prices are the most pervasive hidden persuaders of all. Rooted in the
emerging field of behavioral decision theory, Priceless should prove
indispensable to anyone who negotiates.
