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Why Do Some Companies Raise Prices and Become More Attractive?
The psychology of luxury, status, exclusivity, and why a higher price can sometimes increase demand.
Welcome to The Smarter Brain, a curation of thought-provoking ideas and actionable reads to help you build better habits and become more productive.
Happy reading - See you on Wednesday!
Cheers,
The Smarter Brain Team
Estimated Reading Time: 2 mins
3 Ideas for Better Habits
Status Through Spending
Thorstein Veblen was an American economist and sociologist who studied how people use wealth and consumption to communicate social standing.
“Conspicuous consumption of valuable goods is a means of reputability…”
Source: The Theory of the Leisure Class
Price vs. Value
Warren Buffett is an investor and longtime leader of Berkshire Hathaway.
“Price is what you pay. Value is what you get.”
Creating Desire
Peter Drucker was a pioneering management thinker whose work helped shape modern business strategy.
“The purpose of a business is to create a customer.”
Source: The Practice of Management
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Productivity Tools and Resources
When High Prices Attract Consumers and Low Prices Repel Them
It explains how price itself can act as a quality signal, particularly when customers can't easily judge the actual quality of a product before buying it. Read more here.
Veblen Effects in a Theory of Conspicuous Consumption
This research explains how consumers' desire to signal wealth can make high-priced luxury goods attractive-even when the products are not intrinsically superior.
Price History
Keepa - Tracks Amazon product prices over time. Useful for seeing how prices change and whether a product's premium price is sustained or temporary.
Compare the Alternatives
ShopSavvy - Helps shoppers compare prices across retailers. It is useful for exploring the gap between a premium product and cheaper alternatives.
What We're Reading
Harvard Business Review - A useful source for business strategy, premium positioning, marketing, and the decisions that influence customers' willingness to pay.
Marketing Brew - Covers marketing, brand strategy, advertising, and how companies influence the way customers perceive products.
Brain Food
Today I Learned: A 2016 study published in the Journal of Business Research found that displaying prices could increase perceptions of luxury for premium brands. The effect worked partly through perceived uniqueness and conspicuousness, which then influenced brand attitude and desirability. (Source)
Science: A study published in the Journal of Consumer Psychology reported findings from five experiments showing that price can influence quality judgments-and that these judgments can affect purchasing decisions. (Source)
Have a productive rest of your week,
The Smarter Brain Team
Resource Spotlight
The Premiumisation Mirage: Why Charging More Can Make a Brand More Valuable
Monthly dispatches rooted in marketing psychology, not product specifications-this one's about why “premium” is often created in the customer's mind before it is created in the factory. Explore how price signals, distinctive branding, stories, status, and social permission can make people perceive greater value even when the underlying product hasn't changed dramatically.
The Pricing Iceberg: Why a Higher Price Can Feel More Valuable
Monthly dispatches rooted in consumer psychology, not price tags-this one's about why customers don't experience price as a simple number. Explore how fairness, quality signals, identity, social meaning, past experiences, and context shape whether a price feels excessive, reasonable, or even reassuring.
The 5 C’s of Product Pricing: Value, Psychology, and the Meaning Behind the Number
Monthly dispatches rooted in product strategy, not cost-plus formulas-this one's about how companies should think about the price customers are actually willing to pay. Explore the five forces behind pricing decisions: company costs, customers, channels, competition, and compatibility with the broader brand and business strategy.
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