Willingness to Pay and Reference Price

Take a look at this Yelp review  went through a mess of salons to get some price ideas for mens haircut and I am sorry, I’ve been paying 10-15 dollars for a haircut for 22 years. I cannot and will not pay $80. That’s the price of a new video game! I called the salon … Continue reading Willingness to Pay and Reference Price

Reference Price Of Digital Books

Public libraries do not lend Kindle books. There is news from Sony that its digital books will be available for lending. Public libraries do provide access to digital formats that can be read on PCs and Macs. Just like a copy of physical book can be loaned to only one patron at a time so … Continue reading Reference Price Of Digital Books

Effect of Reference Price On Future Price Discrimination

I do not know how many times I quoted “If one price is good, two are better”.  Instead of reading all my posts on this topic, it serves you well to read this article from The Economist on pricing for music downloads. A very clear explanation of basic pricing concepts and the need for  pricing … Continue reading Effect of Reference Price On Future Price Discrimination

Another Case of Free Reference Price

Spotify is an online streaming music service that allows users to listen to free music with Ads inserted into the stream every 20 minutes. They also offer a premium version that has no Ads. In the terminology used by Mr. Chris Anderson, this is freemium. Whatever the name is, it is a case of tried … Continue reading Another Case of Free Reference Price

Gourmet Airline Food Sets High Reference Price

When US Airways tried to charge $1.99 for soft drinks it faced customer backlash and ended up rolling back to free drinks. As my team’s consumer behavior experiment showed, the plan would have succeeded if they had improved customer reference price before charging for drinks. In our experiment we found that the presence of high … Continue reading Gourmet Airline Food Sets High Reference Price

Wi-Fi In Airplanes – Stuck in $0 Reference Price

Update 2/1/2010: Southwest planning to offer Wifi (for a price). It definitely will help them to read this. How much is getting Internet connectivity at 30,000 feet above sea level and while moving at 240 miles per hour worth to you?  How much are you willing to pay for it? How much are you willing … Continue reading Wi-Fi In Airplanes – Stuck in $0 Reference Price