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Again wrong. How do you think entrepreneurs are pricing their wares if not by perceived value? Did you think they were doing something like "labor cost + 20%"
by danssig 15y ago
Again wrong. How do you think entrepreneurs are pricing their wares if not by perceived value? Did you think they were doing something like "labor cost + 20%" or something?
The cost of making something is only used to determine price floor (i.e. if perceived value is lower than the price floor it makes no sense to create this product).
- altcognito 15y agoThis was originally about trading. Entrepreneurs are not traders, and while in a perfect world they would have a similar set of concerns, but generally not in today's world. (see HFT) What your model of perceived value isn't accounting for are speculators who are in a market with no real vested interest in the product. The correct amount of speculation within a market can round out extremes but there is a balance. Free markets generally find the best prices for most things and works well in the majority of situations.