Pricing is not logical. Neither is how we attribute value in a marketplace.
All retailers have a pricing strategy that customers come to understand and each one is different.
I know that I will pay a firm, premium price for a designer label.
I understand that the price of a cup of coffee at Starbucks is the actual price and that I cannot get a deal on it just by asking.
I know that I won’t get a discount on a new iPhone from Apple.
The strategy for those businesses is to create truth on the price tag.
Sometimes the marked price is set up to create the illusion of savings.
Instead of charging R1000, you charge R999.
The deals of buy one get one free, even though the price you are paying for one item, cover the other item.
This strategy encourages loyalty from the kind of customer who wants a deal.
The sticker price [which is then discounted] gives him the feeling that he has saved money.
This customer gets satisfaction from telling himself a story about the deal he got.
The feeling of getting the deal was part of the reason they shopped there.
Price, like design, location or quality is part of your brand story, one you are asking customers to believe in.
The thing about stories is that you get to choose the story you want to tell and who you want to tell it to. It pays to understand what story the people you choose to serve want to believe.