Pricing pixie dust

Just re-read a chapter of Predictably Irrational.  Fascinating thoughts on pricing. Consider this… Let’s say you’ve got a restaurant, and the most expensive entree is a $20 strip steak. If you add a $24 soft shell crab entree, you’ll increase revenue. But you won’t sell much if any of the $24 crab.

Huh? Pricing is all about context. Adding the $24 crab makes the $20 steak seem inexpensive on a relative basis, and you’ll sell more of it – trading customers up from the $17 entrees.

If you are thinking about pricing strategy, give this book a look.

One Response to Pricing pixie dust

  1. scott says:

    A great read – and good to remember just how irrational we can be: I’d even suggest that the current economic climate was probably exacerbated by the false presupposition of a ‘rational’ market.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: