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The economically most efficient pricing model is to install a brain scanner onto every single potential purchaser and then price the item at a penny below their

The economically most efficient pricing model is to install a brain scanner onto every single potential purchaser and then price the item at a penny below their maximum price or the marginal cost, whichever is greater. Since this is impossible and consumers would revolt, the next best thing is to get consumers to self sort into buckets based on willingness to pay. This process is necessarily going to be imperfect and the tactics can vary but what unifies it is that the goal of designing your product offering is to elicit the revealed preference of the consumer with the goal of increasing profit. Did Apple choose to offer different storage tiers to provide benefit to the customer or increase margins? Probably a little bit of both.

pixl97 7y ago
Dont worry, when we get remote brain scan technology, advertisers will attempt exactly what you are saying. This is a technology that may actually be possible, heck, it could be possible just by life monitoring at the scale FB and Google do these days.
- baddox 7y ago
  I understand the fear of that, but isn’t it much simpler technologically to provide pricing information to consumers? If I’m offered a product for $100 and I check some website that shows the average price is $80, I doubt I would pay the $100.
  - cosmie 7y ago
    > and I check some website that shows the average price is $80, I doubt I would pay the $100. This is itself an indicator of your consumer profile. Many retailers that consider such consumers part of their target demographic handle it by listing the product at the higher price, but being liberal with discounts. Those that aren't price conscious buy it at the listed price, and those that are price conscious shoppers will easily land upon a decent discount code. They even cycle through the promos in such a pattern that they hit most of the price conscious consumers with mediocre deals but still have reliably consistent fire-sale style discounts to draw in the super price sensitive. It's such a tried and true strategy that even RetailMeNot, a site that's popular for price conscious shoppers, is actually owned by the advertising company Valassis (same company that sends out those weekly bundles of junk mail containing coupons and stuff, which most US readers should be familiar with receiving).

pixl97 7y ago

Dont worry, when we get remote brain scan technology, advertisers will attempt exactly what you are saying. This is a technology that may actually be possible, heck, it could be possible just by life monitoring at the scale FB and Google do these days.

baddox 7y ago
I understand the fear of that, but isn’t it much simpler technologically to provide pricing information to consumers? If I’m offered a product for $100 and I check some website that shows the average price is $80, I doubt I would pay the $100.
- cosmie 7y ago
  > and I check some website that shows the average price is $80, I doubt I would pay the $100. This is itself an indicator of your consumer profile. Many retailers that consider such consumers part of their target demographic handle it by listing the product at the higher price, but being liberal with discounts. Those that aren't price conscious buy it at the listed price, and those that are price conscious shoppers will easily land upon a decent discount code. They even cycle through the promos in such a pattern that they hit most of the price conscious consumers with mediocre deals but still have reliably consistent fire-sale style discounts to draw in the super price sensitive. It's such a tried and true strategy that even RetailMeNot, a site that's popular for price conscious shoppers, is actually owned by the advertising company Valassis (same company that sends out those weekly bundles of junk mail containing coupons and stuff, which most US readers should be familiar with receiving).