Top positive review
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Entertaining, apposite, and extremely useful
on 7 January 2013
Told with the aid of a highly entertaining tale about the fictional Chocolate Teapot Company, the Psychology of Price explains the key effects of pricing on retail, service and tender-based commerce.
Most people are aware of the 99p effect, but it turns out that the psychology of price goes much deeper, with techniques such as anchoring, bundles and decoys able to create substantial shifts of consumer behaviour while increasing overall margins.
Author Leigh Caldwell builds up a strong and coherent picture not just of how price psychology works, but also of how you can apply it in your own situation. Although his main narrative is in restaurants and retail, he gives good attention to services, consultancy and tender-bidding, which means there should be something for everyone here, as long as you are actually involved in price setting.
Unlike many books which have grown out of training courses, the Psychology of Price has successfully made its way into the book form, and this is largely due to the author's inspired use of narrative to take us there. The Chocolate Teapot Company is weirdly plausible, but it's the twist at the end which makes this a tale worth telling in its own right, rather than just a series of amusing fictional anecdotes.
I raced through this book, but you can also follow it more carefully using the charts and exercises as you work on your own products.
This is one of my top recommendations for business reading in 2013.