Price Sensitivity
Dinner and drinks in an upscale restaurant in China - $20. To most of us that seems wonderously inexpensive. To somebody visiting from China, an equivalent dining experience here seems insanely expensive.
However it is referred to--price sensitivity, price parameters, price expectation, price perception--customers come to a potential transaction with a subjective price point that they are loath to exceed. As the example in the first paragraph illustrates, this price point may stem from expectation (experiences with comparable things). The price point also may be driven--or at least conditioned--by image (the look, surroundings, etc. of the product or service). Value-conveying marketing language can also affect perceived value.
Simply putting the word "overpriced" into Google gives many examples. Cell phone plans, software, toys, student fees--the products and services run the economic gamut. MSN Money has a list of fifteen things the recession has rendered overpriced (in their opinion); one of the things, movie theater popcorn, is dealt with in the book Why Popcorn Costs So Much at the Movies: And Other Pricing Puzzles.
The Library offers access to other materials in a number of formats that can turn pricing from mystery to profitable science for you. Contact us to get up to speed on this all-important aspect of business.
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