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Priceless: The Myth of Fair Value (and How to Take Advantage of It) Hardcover – Bargain Price, January 5, 2010
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Top Customer Reviews
From the title it sounds like a fairly dry book on pricing theories for a professional marketing audience.
In reality it is a very entertaining, well researched book about how prices are set from all kinds of businesses, how consumers react to them - and why.
Having worked in marketing and as an entrepreneur for 20 years, I have come across some of the stories quoted in the book already. However, I was not aware, that a German professor (Hermann Simon) runs the biggest pricing consulting firm in the world, that restaurant menus are better designed without leading dots before the price (otherwise they guide the eye to the lowest priced item) or that supermarkets yield a $2 higher average shopping cart revenue if the path through the market goes counterclockwise instead of clockwise.
It will take some work to extract pricing lessons for your own business (you actually have to READ the book first!) but it is pleasant enough!
Now having read the book, I have to say that, although I learned things about the human mind I never knew before, I was disappointed in how dry the book was overall. The first half was devoted to the history of psychophysics, and numerous experiments conducted over the last hundred or so years. These experiments have served to establish just how quirky, irrational and suggestible the human mind is with regards to numbers, and pretty much debunk the established notion among economists that humans behave rationally when it comes to numbers, always making decisions that will best benefit themselves (the mythical Homo Economicus). Although these experiments were all new and surprising to me, reading about them felt like reading a college textbook. Not exactly my idea of pleasure reading!!
Just about exactly halfway through the book, Poundstone gets more interesting. This is when he starts citing real-world examples of how savvy businesses take advantage of the mind's susceptibility to numbers (often using the service of "price consultants"), all with the intent of getting clueless customers to part with more of their hard-earned money. This part of the book was truly fascinating, as he talked about how super-pricey designer boutiques arrange merchandise in their stores, how restaurants design their menus, and how new and unknown artists price their work to gain attention.
Alas, this part of the book was all too short, as Poundstone soon lapsed again into talking about more experiments.Read more ›
The story is, I had been trying to buy this book for a few weeks from Amazon.
But I couldn't (without incurring shipping fees), because Amazon had delisted the hardcover book from their catalog. Why would Amazon refuse to sell a new book by a prominent author? Well, ostensibly it was "retaliation" for the book publisher's (Macmillan's) request that Amazon charge higher prices for Kindle books published by Macmillan. Leaving aside the question of why users without a Kindle should have their ordinary book access restricted because of a pricing dispute over a product they do not want, the imbroglio raises two salient issues about pricing:
(1) Why is $9.99 (what Amazon wanted to charge) the "right" price for a Kindle e-book? Why not $12.00 or $14.00 (which Macmillan wanted to charge)? If you read some of the Kindle users' blogs, they are adamant that $9.99 is the right price, and that $14.00 is too high - but how do they know?
(2) Why would Macmillan care if Amazon charges too little for Kindle pricing anyway? It doesn't directly affect their profits (Amazon makes up the difference).
Well, as it turns out, the underlying framework behind both of these questions is carefully discussed and elucidated in this very book!
As to issue (1), Poundstone argues that much of what we think of as "fair" pricing is nothing more than a collection of cognitive fallacies and biases. The most important of these fallacies are the contrast effect (pricing taking on significance from neighboring prices) and the anchoring effect (we are drawn to a particular number).Read more ›
I thought this book was a brilliant and critical instruction manual to one of the most important aspects of modern life. First, everything you learned in economics class is demonstrated to be flagrantly wrong. Prices do not reflect some kind of supply/demand curve intersection. Prices are more random. More magical. More predatory. And it is the human brain that is the exploited weakness.
Poundstone's writing, to me, is quite good. I found him literate and well-organized. The pacing is good and the research is thorough. Indeed, my biggest complaint about the book is that I have already read about many of the interesting studies he cites. This does not diminish the effect since everything he cites is a bona fide interesting case.
As I read this book I kept thinking, ok I'm smarter than this, I'm not part of this irrationality. But the inescapable conclusion is that you are. Prices are hard to deal with sensibly using all available information. Our minds are designed for short cut heuristics that mostly work, but which can be exploited. You can minimize the problem but vigilance is required.
My hope is that the author and publisher didn't waste the delicious opportunity to play some price games with the book itself. What would the difference be between a market with a $40 cover price discounted to $10 vs. a market where the book was just priced $10? Can the author prove some money was earned by choosing a better cover illustration? Etc. I hope to see a new chapter in the next edition! Which I will get from the same supplier as I got this edition, the library.
Most Recent Customer Reviews
Great information..! I'd recommend this read for anyone interested in understanding how products are priced.Published 1 day ago by David D.
Great way to expand your mind and thought process. Not so easy to read through the whole thing.Published 15 days ago by Young
There is so much to think about in this book. If I had to synopsize it in one sentence, it would be something like "Why optical illusions can be analogized to reasoning errors... Read morePublished 1 month ago by Leib Gershon Mitchell
I love reading about price psychology and this book deliversPublished 5 months ago by Steve & Karen
This is a wonderful review of the pricing research that exists in the world . I had a number of preconceptions very much challenged by this book . Read morePublished 11 months ago by RV52
Have to say, I don't review often, however this book is one of those few game-changer books that you come across maybe 4 times in a lifetime. Read morePublished 11 months ago by John
This is an important work on pricing psychology that has taken its place alongside Ryski's Conversion, Dixon and Toman's The Effortless Experience and Buckingham's First Break All... Read morePublished 12 months ago by Peter Patrick Smith