Does a lower price always sell more?
Free samples draw a queue. A watch priced too low draws nobody.
Consumer psychology
Zero-price effect
Cheaper pulls in more buyers.
Cut a price from ₹10 to ₹5 and a few more people buy. Cut it to zero and they rush in. Free feels like it has no downside.
- Right when
- When people are buying the thing itself, and a lower price removes a reason to say no. Free removes the last one.
- For example
- A tea brand hands out 500 free sachets of its new masala chai outside a metro station, and they’re gone by noon. At ₹5 a sachet, most of those people would have walked past.
- Wrong when
- When the low price makes people doubt the quality, or draws takers who will never pay.
Consumer psychology
Veblen goods
The high price is the point.
For a few products, a higher price makes people want them more. A cheap luxury watch would sell worse, because the price is part of the point.
- Right when
- When the price is part of what’s being bought: a luxury, a gift, anything people buy partly to be seen buying.
- For example
- The same brand sells a Darjeeling gift box at ₹2,500 for Diwali. Companies send it to clients because it looks generous. At ₹800, it would look like an ₹800 thank-you.
- Wrong when
- When nobody else will see it, and the high price is just a cost.
What decides it
Is the buyer paying for the thing, or for what it says about them?
Most of what we buy, we buy for what it does, and there a lower price helps. But for a gift, a luxury or a status symbol, the price is part of the message. Cut it, and you cut the thing they came to buy.
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