Customer want to prices to be what they expect to pay..
The reason pricing is so hard is because it is both subjective and objective at the same time. Most items are priced based on cost of goods, materials, time, or skills involved, but some items are jacked up astronomically because of perceived value (luxury to show status), while shit on Temu is drastically underpriced in order to attract new customers (to steal and sell your data).
It gets pretty dicey trying to price something in the right way. It’s a balancing act between a lot of intertwining factors.
One factor that adds to our collective headache is the anchoring bias… which is entirely in the head of the customer and can vary from person to person.
In our little cartoon above, we can see that the price of beer is in question. Most pubs charge around $7 for a pint. So if you have 4, the bill would be $28. Not crazy, and if that were your bill, you wouldn’t complain. You’d actually add around 20% for a tip.
But that same 4-pack is probably $12.99 at the supermarket.
The point is that in the mind of the customer, there is an anchor associated with the price that affects their perception of value… or of what is a “good” or “fair” price.
Same as the difference between a hot dog at Costco vs a hot dog at Wrigley Field. You know that frank is gonna be cheap at Costco because its always been cheap. You also know that a hot dog is going to be $15 at the ball game.