Also, I have an Italian friend who sells jewelry and a long time ago he taught me that one of the ways to make something … anything … more valuable is to simply increase its price. If you price something cheap, people naturally think it’s cheap … if you price something as valuable, even if it isn’t, most people will believe it is valuable and will be willing to pay the higher price.
That typically only works for luxury goods, but yes. A good that inverts the effect of price on demand is called a Veblen Good.
But that strategy probably wouldn’t work for something like rice or shampoo or socks or drywall putty unless people start using those as status symbols.
Makes me wonder if those $80 Monster HDMI cables were lucrative. Might be that the rule applies not just to luxury goods, but for any good where the consumer is too ignorant of the market to have any frame of reference to compare to (e.g. the technologically illiterate).
Imo the price of those was justified solely by fraud. I.e. they lied about picture quality being better, etc. I also don’t know that demand for those was all that high and am even more skeptical that it’d be driven by price.
This and the Send Me to Heaven app (throw your phone as high as you can, higher height means higher score) were two of my favorite early apps clearly designed to mess with people buying expensive devices as status symbols.
I think it works for slightly more expensive things too. Like absent any noticeable difference we would assume that a $5 hotdog was better than a $2 hotdog.
You may be thinking of Veblen goods, which are marked up to such a degree that the high price point is the point of the purchase. It makes the product more exclusive.
But a $5 hotdog is very expensive while a $2 one is just “a normal hotdog in an expensive place”. It’s the jump from the “normal” price. 2x is expensive. 10x is “exclusive”.
Is that a Ferengi rule of acquisition?
Also, I have an Italian friend who sells jewelry and a long time ago he taught me that one of the ways to make something … anything … more valuable is to simply increase its price. If you price something cheap, people naturally think it’s cheap … if you price something as valuable, even if it isn’t, most people will believe it is valuable and will be willing to pay the higher price.
That typically only works for luxury goods, but yes. A good that inverts the effect of price on demand is called a Veblen Good.
But that strategy probably wouldn’t work for something like rice or shampoo or socks or drywall putty unless people start using those as status symbols.
Makes me wonder if those $80 Monster HDMI cables were lucrative. Might be that the rule applies not just to luxury goods, but for any good where the consumer is too ignorant of the market to have any frame of reference to compare to (e.g. the technologically illiterate).
Imo the price of those was justified solely by fraud. I.e. they lied about picture quality being better, etc. I also don’t know that demand for those was all that high and am even more skeptical that it’d be driven by price.
Insane claims and matching prices is par per course in the world of “high end hi fi”. It gets much, much worst than Monster overpriced digital cables.
Young ones may not remember this
Reminds me of an old joke.
A man is standing on Wall Street. He has a sign that says 'Pencils For Sale." A broker walks up and asks how much for one pencil.
“$50,000.00”
“$50 thousand for one pencil? At that price you’re not going to sell many.”
“At that price I only need to sell one.”
This and the Send Me to Heaven app (throw your phone as high as you can, higher height means higher score) were two of my favorite early apps clearly designed to mess with people buying expensive devices as status symbols.
But I think it has to go way up. If it goes up but not enough then it’s an expensive thing, not a valuable one.
I think it works for slightly more expensive things too. Like absent any noticeable difference we would assume that a $5 hotdog was better than a $2 hotdog.
You may be thinking of Veblen goods, which are marked up to such a degree that the high price point is the point of the purchase. It makes the product more exclusive.
But a $5 hotdog is very expensive while a $2 one is just “a normal hotdog in an expensive place”. It’s the jump from the “normal” price. 2x is expensive. 10x is “exclusive”.
Yeah you can play with the numbers, and it all depends on the economic context.