The Price Is Wrong: Understanding What Makes a Price Seem Fair and the True Cost of Unfair Pricing

This book looks at our cultural norms in light of fairness in pricing. Its excellent insights are interesting to anyone selling accross markets. It is written in an accessable style that makes you want to read to the end.

I've priced hundreds of products (for myself and for clients) and not once did the question of fairness arise. But not any more. What is groundbreaking about this book, from a marketer's standpoint, is not that some consumers find some prices unfair. Heck, some consumers find any marketing, not to mention most prices, unfair. It's Maxwell's analysis that there are two categories of perceived unfairness -- only one of which infuriates consumers. And it was the opposite of what you would think. This book is also an eye-opener as to the extent to which consumers want revenge if your price is perceived unfair in the wrong category. This is the first book I've ever touted as a "must read" for marketers. Fortunately, it's also a fun read -- even though it is well stocked with research to back up her premises. You won't think about pricing the same again.

Every transaction you have with a customer can be the start (or continuation) of a long and profitable relationship. This is why ensuring that customers feel that your price is fair is so important. Fairness should be an integral part of every pricing decision. In her book, Dr. Maxwell shows companies how to incorporate the concept of fairness into their pricing strategy to help maximize profits. The Price is Wrong is a book that every manager who sets a price should read and benefit from.

This book gives you an inside look at what makes the market tick. Sarah Maxwell delivers a book thats informative and a page turner at the same time.

Among the many contributions to knowledge of Nobel laureate Daniel Kahneman was a pioneering experiment on the circumstances leading consumers to judge a price as fair or not fair. While that work stimulated much discussion in the world of economics, it is fair to say it did not register like an earthquake in the business community. Most price decision-makers continue to focus on costs, competitors, and (usually) on some data or beliefs about how buyers balance the product's value with its price. The idea that there may also be an emotional content to buyers' responses to price seldom enters the equation. However, as Maxwell demonstrates in this book, the success or failure of a pricing strategy often hinges on the fairness issue. The author combines insights from consumer psychology and economics with practical, real pricing cases to explain how people judge the fairness of a price or a price change, and to underscore the managerial significance of buyers' fairness judgments. Today, there seems to be a growing reliance on price discrimination methods such as dynamic pricing, price bundling, versioning, and frequent customer discounts so that different buyers pay different prices. At the same time, the internet is making price information increasingly transparent to consumers. Accordingly, managers can expect to encounter more pockets of resistance from buyers who observe price differentials or increases that seem unfair. I find that a business book is memorable and impactful if it successfully imprints a few central and fundamental perspectives or heuristics. For me the most powerful takeaways from this book are the fact that there is an emotional content to many consumer responses to price and the idea that "social norms" are the central determinant of judged fairness or unfairness. Pricing managers seldom consider these points as they pour over cost and demand data. But, as Maxwell demonstrates, they can have a powerful impact on sales and brand image.