March 20, 2024

$28 Incense

Today I went into a fancy gift store to buy some incense.

The price was $28.

It was worth that much to me in the moment, so I decided to buy it.

Here’s the thing...

At NO POINT in making my purchase decision did I consider 1) how much it cost the manufacturer to design, produce, and package the incense, or 2) how much it cost the shop owner acquire the incense and make it available for sale.

I simply thought, “Would I rather have this twenty eight bucks or that fancy incense?”

Why does this matter?

It matters because you price stuff, and you might be basing your prices on your costs.

But the seller’s costs are almost always irrelevant to the buyer’s purchase decision.

So if you’re selling something, setting your price based on your costs makes no sense.