Captain’s log, stardate 20190822
Sent by Jonathan Stark on August 23rd, 2019
Fellow list member Jordan Mogck wrote in with this delightful example of value (not cost!) determining price (shared with permission, bold mine):
Hi Jonathan! I just came across an interesting piece on silicone rings and immediately thought of you and your arsenal of value pricing anecdotes. Here it is, from today’s issue of Glimpse: Silicone rings are used as alternatives to wedding rings and have led to numerous multi-million dollar businesses selling rubber rings at high margins. The category began a while back targeting extreme workers like firefighters and medical professionals who sometimes couldn’t wear metal rings on the job. The list of customers has since grown to include those who don’t want to wear their rings every day either to be more comfortable or to avoid losing them. Brands can justify high prices - up to $40 per ring - by basing them on the value rather than on a multiple of production cost. They frame the value in the context of the vastly higher price of an actual wedding ring. Consumers don’t want to spend only $5 on something that, in their eyes, symbolizes something as meaningful as their marriage. Pricing dynamics like these are common, where consumer behavior may shift while existing pricing constructs remain.