In his biography of Charlemagne, Notker the Stammerer relates a story of two “Scotchmen [who] were unrivalled for their skill in sacred and secular learning.” These men would go into the market and call out, “Ho, everyone that desires wisdom, let him draw near and take it at our hands; for it is wisdom that we have for sale.” This claim drew in the crowds and, ultimately, the attention of the emperor.
The twist in the story, however, is that the Scotsmen really had no interest in marketing their learning to make a profit. They had simply come to realize that if they offered to teach for free, nobody would be interested. Because the price tag is the first signal that the market sees, things that are being given away for free or sold cheaply are assumed to have little worth. Likewise, some people put extremely high prices on their products (even if they intend ultimately to sell for a much lower price) in the hopes that the product will appear more desirable.
I was a tangential party to a real life example of how asking price affects perception. One of my side jobs in college was dealing cards for a promotional company that ran poker tournaments as fund-raisers. The tournaments were well organized and quite successful. However, the owner of the business quickly discovered that some prospective clients saw his very reasonable prices and decided that they wanted to go with a more up-scale competitor. His solution was to raise the prices without changing anything about the product. And it worked. New prospective clients assumed that the high price was a good indicator of the product’s high quality. Business actually increased after the price went up, precisely because the price went up. Like Notker’s Scotsmen, the owner of the promotional company learned that sometimes you have to ask for more than you need, just to get people’s attention.
Beer of the week: Modelo Especial – The head on this beer faded so quickly that I couldn’t get a good photo of it before it was gone. Modelo Especial is a clear, gold brew. It has little aroma or flavor to speak of, really. It’d be easy enough to drink a bunch of this stuff at a party Cinco de Mayo fiesta, but otherwise, why bother? And don’t get me started on the price!
Reading of the week: The Life of Charlemagne by Notker the Stammerer, Book I, 1-4 – Charlemagne filled his court with educated men, such as the aforementioned Scotsmen, and had them educate the children of his kingdom. He found that the highborn children did not take to their lessons as well as the commoners. The lesson, again, seems to be that certain assumptions about value need to be carefully scrutinized.
Question of the week: How much does the asking price affect your perception of a product’s value?