Paying the right price

Paying the right price

By Rajesh Setty on Tue 19 Sep 2006, 11:37 PM – 3 Comments

We all want a good deal. Don’t we?

What if we get a deal that is too good to be true? That happens very often actually.

Example: When you read a VERY good book. Think about the price you paid for that book. Isn’t it a steal?

One of the great lessons that I learnt from one of my earlier mentors was learning to pay the right price. Valuing stuff the way they should be. It has served me well in my life.

Those who know me closely know that I buy a lot of books – a few hundred every year. Most of the time I buy multiple copies of the same book. My criteria is simple. If I get a lot of value from a book, I want to give back in some way. The easiest way is to buy multiple copies of the book and give them away. While I may not make the author rich individually, I can at least act as a catalyst to spread his or her ideas.

While it is never a good idea to pay more, paying less is not good either :)


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3 Comments so far, Add Yours

Anonymous  on September 20th, 2006

Thinking aloud: But how do we come with the right price? We could probably consider it as the right price is relative and subjective based on the individual.

Anonymous  on September 20th, 2006

Thanks Sudaakeran.

This is where it gets tricky. Same book. Different value extraction based on individuals. That is the way it works. Each person can get different value out of the same book. Hence a different price.

Only the person can determine the price. Nobody else :)



Anonymous  on October 5th, 2006

It’s a bit more complicated. On the one hand, you have the customer which perceives an individual benefit from the book. On the other hand, you have the publisher.

The publisher has got fixed costs (paying the author, marketing, staff, …) and variable costs (printing, delivering, …). So, the per unit cost (and thus the price) depends on the amount of books that can be sold.

The customer has (as mentioned) an individual benefit. When you lower the prices, you can reach more customers and spread your fixed costs. Furthermore, the benefit for a customer which perceives more value than another, increases.

So, pricing is ultimately about finding a good trade-off between costs for the seller and worth for the buyer.

If you can take more money from one customer than from another, this is called discrimination (no in a negative meaning). This is what you support, when you give them extra money. However, you are lowering your own benefit. Nevertheless, I like your buy-and-giveaway idea :-)

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