26 March 2014

On Psychological Price

Personal Picture // St Michel, March 2013

When minimalists discuss the price of things, it usually comes down to investing in quality pieces, calculating cost per use (or cost per wear in the case of clothing). Or it is about high street store and the real price of the cheap items we have at our disposal. Today, I'd like to discuss another side to price: how marketing sets a price point to objects, and why we should be aware of that as consumers.

When a company decides to put an object on shelf, they have to decide how much they want to sell it. First, there is the basic, logical calculation - how much does it cost to produce, and how much margin they need to get out of it to pay for the company's expenses, paychecks etc. I'm sure there are finance teams with excel sheets and "ROI calculations" right on top of it.

However, there is another, maybe less obvious aspect to deciding the final price of an object: the "psychological price" - in order words, how are consumers going to perceive your product, depending on how much it costs? Everyone knows the .99 trick. Make a 10€ object 9.99€ and suddenly it looks much cheaper. But there are many more aspects to psychological price.

Perceived Quality

If there is one thing the "cost per wear" formula proves, it is the fact that consumers assume a more expensive item will be of better quality. A friend of mine shared an actual experience that proves it, when he was working in a supermarket as a student. They'd received a batch of cheap, plastic watches to sell. They put it on shelf at 2€ to get rid of them, but they didn't sell very well.

A few weeks later, they put it back on shelf at 30€ (most probably, 29.99), and they sold in a few days. Why? Because 2€ is considered too cheap for an electronic item like a watch. It has to be a fake, cheap thing that will break in no time. They didn't trust the 2€ watch. But at 30€, suddenly it was a more acceptable price for a cheap looking watch. even though the manufacturing price was the same (probably less than 50 cents a watch...) The thing is, these watches probably were cheap crap that would break in no time, but raise the price and it suddenly seem psychologically acceptable.

Of course, using psychological price isn't only used to make a cheap item acceptable, it is also used by many brands to raise the perceived quality of their items. If a brand wants to position itself as a high quality or luxury brand, they will artificially raise prices, not only to raise their margins, but also to have an impact on the perceived image of their products.

Studies have been conducted (I couldn't find my class notes so I can't point to one in particular, sorry for the sloppy sources) that show how much people were willing to pay for 2 similar items. In that  case, it was cars. They put labels on the same car: Audi, BMW... and asked people how much they were ready to pay for the car. Systematically, they were willing to pay more for the brands perceived with higher value (Audi for example) than the ones perceived as cheaper (Fiat for example). Thing is, the car itself - design, fabrics, look - was exactly the same. This shows that the price we are considering acceptable for an object is highly biased by the image we have of the brand.

Why it is important to notice: This is a perfect reminder that price and quality are not necessarily correlated. Sure, a higher quality item will be more expensive, as it uses better fabric and sturdier fabrication methods, but more expensive items are not necessarily of better quality. Price isn't a reliable criteria of quality.

Raising Price and Breaking Point

When companies raise the price of an item, they also choose carefully of how much they will raise that price, how many consumers they may lose in the process. It's called "élasticité-prix" in French, I don't know the English term for that. Basically, you calculate the ideal percentage of price raise that will not put off too many consumers.

That's why many brands have been steadily raising their prices every year, but we didn't quite notice, as each raise was small and subtle enough to make it acceptable. I have the striking example of Comptoir des Cotonniers to share, as a long time consumer. I didn't keep track of every price raise, but I do remember my very first purchase. It was in 2004, and it was a cashmere and silk blend pearl grey knit. It was 100€, and it seemed a lot to me, as I had to babysit my neighbour's daughter for over a month to gather the funds.

Now take a look at this season's Comptoir knits. The cheapest ones are thick T-shirts, not proper knits. And their cashmere ones are priced 145€. A 50% increase in 10 years. If you raised your knit's price by 50% at once, everybody would notice and complain. But add 2€ here, 5€ there each season, and over the span of 10 years, it goes unnoticed.

Why it is important to notice: Small and steady price raises change your perception of an "acceptable" price. In Europe, we saw it first hand with the introduction of euros. Can you imagine that 20 years ago, a baguette of bread used to cost less than 3 francs in France, which was what, 40 cents? Now, it cost 1€. One. Euro. It doubled in 20 years, yet we now perceive 1€ to be an acceptable price for a baguette. For items of necessity like that, there isn't much to do about it, but when it comes to non-necessities, like candles, make-up, clothes, decoration items, the price range of offerings is wide enough for us to turn to really decent offers and avoid getting used to unacceptable prices.

What to do as a Consumer?

As everything, being aware fo the situation is the basis. Knowing about psychological prices is a good way to set your own "acceptable" price range for each item type, depending on your income, needs and values. To me, here are some of the key elements to be aware of:

  • The real cost of goods: It is depressing when you know these things, as it means people are paying a high price for such low costs down the production line, but the "COG", cost of goods, is usually MUCH lower than you imagine, when mass produced items are concerned. When we create video game goodies at work, they cost maybe one tenth of how much it would be sold, transport included. Can you imagine how much it really costs Comptoir des Cotonniers to manufacture their 145€ Cashmere knits? If the consumers who bought the 30€ watch mentioned above knew the supermarket was already making a profit by selling it 2€, would they have bought it? Or would they, rightfully, have felt cheated?

  • The real criteria for quality: Now that we are not in contact with the craftsmen anymore, it feels we consumers have very limited knowledge of how the items are made, we therefore have no idea how to assess the actual quality of what we are buying. Instead of relying on price or brand name to judge the quality of an item, we should rely on objective criteria like the fabric/material used, the design, the finish... I admit it probably necessitates some research at first, but isn't it worth it, to evaluate if the price really matches the quality of the item you are about to buy?

  • The manufacturing behind the scenes: Psychological price is one of these "behind the scenes" elements we are unaware of. Take a leather bag for example - say it costs 200€. In order to assess if that price is acceptable, I guess you'd need to know more about how it was made. Not only the cost and quality mentioned above, but other details, such as how has it been manufactured? How was the raw material produced? Where? Was it chain-made by underpaid workers for a real cost of 20€ for the company, or was it hand-made by a local craftsman? Knowing as much as possible about the manufacturing process of an item is one of the best ways to figure out if the price is really justified or not.

Just like many more marketing techniques out there, the price point setting and manipulation mostly uses unconscious thinking processes. In other words, as consumers, we make these "psychological" judgements on price without even realizing it. However, I think this is an important factor to know about, especially for those of us who want to engage in more mindful consumption. What do you think? What criteria do you base your budgeting on?


  1. Thank you for this. So much to think about! I'm working on becoming a more mindful consumer, but I'll be honest -- it feels like a lot of work. I think maybe a lot of people are put off by the amount of thought that really needs to be put into this. It's easier just to go to the store on autopilot, find what you like (or what fashion says you should like), accept the price and quality without thought, and go on with your life. I don't know if the majority of people are willing to give that up. Suddenly shopping is less fun and more work, which is probably how it should be in order for us to tame the level of our consumption. So I'm trying. But it's a slow process for me.

    1. I can't agree with you more! IT IS 'easier just to go to the store on autopilot, find what I like, accept the price and quality' and just ENJOY the new finding. As I am also trying to become a mindful consumer, IT IS becoming 'less fun and more work, which is probably how it should be in order for us to tame the level of our consumption.'(--- very cleverly said!) Indeed, it's a tough job, especially for a fashion-obsessed one like me. But I'm feeling a little light across the tunnel, as I'm feeling a little less urge of buying something, and less sense of fulfillment and joy after a consumption, from the time I started to contemplate and judge my purchases.

    2. That's a very interesting point to raise indeed - and a big barrier for most people to be more mindful about their consumption in general. Marketing and advertising make it easy to just go shopping, pull out the credit card without thinking. It is always easier to go on autopilot.

      However, from my personal experience, although it seems easier on the short term, I don't find it very fulfilling on the long term. I only speak for myself of course, I wouldn't pretend to know how things happen for other people, but since I started thinking more about my purchases, each purchase is more meaningful, I enjoy my new purchases better, and I also enjoy my shopping trips better as they are more rare, therefore more "important".

      But I do understand that, when caught up with everyday business, it sounds daunting to take time and energy to plan purchases ahead, and it may sound like it takes the fun away. I think the best way, like any project that looks big, is not to think about the big picture but just the next purchase, take it one step at a time. Besides, posts like this one may make it sound boring, but, during my wardrobe editing process, I have actually had a lot of fun sorting out my items, creating new outifts, putting together wishlists, searching for the ideal piece... And I don't like fashion, so I can imagine the creativity and imagination a fashion lover can add to the whole mix to make it even more fun.

      Finally, another thing I can add to the debate is that it is fine to just go for a "bad" option from time to time. When you find a brand that offers a piece you really like, why not splurge once in a while? I found that, when aware of things like the psychological price, and quality - in other words, when you are aware it is a bad idea, but consciously decide to indulge anyway - it feels actually better. Because you know you are "authorizing" yourself the little pleasure, so there is no guilt. Besides, it is usually more rare, so the piece feels more special. I know that, despite all I say about Comptoir des Cotonniers, I still like the brand's style, and offer myself a couple of pieces each year. It is a mindful decision to make myself a little unreasonable gift, making it actually more joyful. If it makes any sense.

      So, longer comment than planned, but I hope it helps, and I think it is already a great step to actually want to engage in mindful consumption. A little thing is better than nothing at all, and I hope you find ways to make this fun even if it sounds like work :)

    3. I have to say that one of the things I enjoy about becoming a more mindful shopper, is actually the research that accompanies it ... I would understand how that's not the case for everyone, because I suffer somewhat from 'infobesitas' :). Nowadays I spend more time researching and reading blogs and checking pinterest than actually shopping, which is good for my finances and for the environment ;).
      But I wonder, if you go into stores and buy on autopilot, how can you really enjoy what you're doing, and how can you enjoy the results? This seems to me the sort of shopping that leaves you feeling hollow and unfulfilled in the end as it often leaves you with a wardrobe that lacks cohesion. Also, I get tremendous fulfillment out of clothes that stay in good shape for longer than I'd expected. (I don't like to be 'let down' by my clothes, I'm very sentimental.). Or out of knowing (or thinking) that I made the best possible choice out of everything that's out there (more relevant for bigger purchases like furniture.) It's also very satisfying to realize that the shoes/dress/jacket that you bought years ago still puts a smile on your face whenever you put it on! And finally, as I'm moving towards ethical shopping (which I admit is VERY challenging - adding ethical standards to all of your other requirements), I get enjoyment out of knowing the item I wear has made people's lives better instead of worse.
      Perhaps this should be my conclusion: that mindful shopping in itself might not be as much fun, but the experiences beforehand and especially afterwards, with the results, definitely are.

  2. I love this post, thank you! It's so easy to forget these things. "Raising price and breaking point" makes me think of the Black Friday sales in the US. Apparently some (maybe all, even) retailers start slowly raising their prices in the weeks before the day, so that when they "reduce" the prices, it's not actually that great of a deal for the consumer, and the stores don't lose that much money. It's so sneaky!

    And "perceived quality" makes me think of J. Crew. It only came to Canada very recently so I don't know the brand too well, but apparently the quality used to be much better than it is now, even though the prices are still nuts. Many customers know this, and they still buy!

    I think it was on J. Crew's website where I saw a polyester item that was marked "dry clean only." Either that's some fancy polyester, or they're trying to make us think it's more distinguished than it really is.

    1. I remember there was a similar polemic a few years back in France, where shops would increase prices shortly before sales to make people believe they made a great bargain. I think it's illegal here now - the "before" price must have been the same for a certain amount of time before the sales start. But that's typically the kind of tricks marketers use to try and trick us.

      I have heard a lot about J. Crew, although I have never seen a single piece yet, as it doesn't exist in France (as far as I know) - but I can imagine this decline of quality. I heard the same of Massimo Dutti, Ugg... I think it is, unfortunately, the global trend among established brands. They use their image to keep prices high, and lower the cost of production of their items (lowering therefore the quality too). As long as consumers keep buying, they'll keep doing it. Maybe that's where we can use our "consumer muscle", by refusing to buy full price from these brands, sending a message that the price jsut doesn't match the quality anymore. But that's not so easy I guess...

  3. I don't have specific criteria since I don't know textiles well, but in general: I won't pay more than a set price for certain types of cloth (e.g. x < $30 for a 100% cotton tee shirt.) I've paid $80 for a button-down shirt at JCrew. I didn't think it was quite worth that full price but I liked the print/pattern and I didn't want it to sell out. Imagine my slight chagrin 3 months later when there was stock of my size at 40% off. Not to mention I've also learned that certain things wear out faster (white tees never stay pristine; seams can come undone) so why pay $$$ for something that is by nature due to be replaced sooner?

    I assess each brand and what I know of their past manufacturing quality and buy when I've hit a "fair" price. I'm better now at knowing what amount of performance/longevity I can get from each maker and if I want a piece to last longer, I'll get the more durable (and usually pricier) version of what I need.

    Love these thought-provoking posts, Kali; well done.

    1. I guess the price range per item type is defined through trial and error indeed. Like you I have noticed certain items tend to wear out more quickly anyway, so I shouldn't be spending too much on them. There is also the ethical part of things, I have a tendency to accept to spend more for companies who actually try to do something about the worker's conditions or environment. The key is to take away learnings from past experiences and adjust future purchases I guess.

      For the J Crew shirt, I can totally imagine the disappointment once it was on sale, but if you really liked it, what matters is that you have secured one, I guess. I don't often buy from that kind of brand full price, but when I do, I don't look at the sales to avoid that kind of dismay haha.

    2. I really thought it was going to sell out since it was navy and polka dots (seems to be very popular with the preppy set), but I was surprised to see it in the final sale section months later. I guess my style prediction was off! :)

  4. I love this post! (all of your posts are great! but sadly, I have so much to do with finishing university, I don't have the time to take part in the discussions here :( )

    The price raise is something I thought about lately, too. I agree with you, but you still have to consider a) the normal inflation and b) the high inflation since 2008.

    1. Of course I understand, I'm glad to hear you enjoy my posts :)

      It is true that there are many factors to take into consideration when talking about price raise, and inflation is certainly one of them, as is the steady increase of the price of raw materials, which needs to be transfered to the price of the final goods. I'm not an expert, but I think that, as far as the euro is conerned, the inflation isn't that high actually. And the currency is strong, so importations should be cheaper (no doubt both the raw materials and finished products are imported and not made in Europe).

      What I wanted to point out in this post, is that, more often than not, pirce increases are an intentional marketing decision, on top of economic constraints. It is the best way to improve the image of a brand and make it look more luxurious, attracting higher class consumers who can afford to pay more.

  5. Me personally do pay attention on the quality of goods I'm going to buy, especially clothes, because I'm majored in it. But I think it's too complicated for people without any knowledge, to assess the quality of goods. 'The research' you suggested may be way too much work, for some, I guess. So maybe it's easier to rely on the brand name, but I think the choice of the brand could make a huge difference. For example: a $2000 leather bag wouldn't exceed that much in quality than a $200 leather bag, or same with denims. Even though I never used a $2000 bag, I'm pretty sure its the price from the brand image, not its real value...I hope you understand what I mean :)

    I totally agree with your idea of 'psychological price'. We do tend to think that something is of good quality, if its expensive. Also, I've noticed that along with our increase of income, the 'acceptable price' for a particular item also increases. Even though I could manage to live with cheaper things, I now tend to buy more expensive things, hoping they will last longer or to try to look well-off.

    Always glad to read your thought provoking posts, thanks!

    1. Yes, it can definitely be a lot of research for the consumers who are not expert is whatever item they are about to buy. Barry Schwartz actually points this problem out very accurately in his TED talk about the paradox of choice (http://www.ted.com/talks/barry_schwartz_on_the_paradox_of_choice). He says that 1. there used to be less options to choose from, which made comparison easier and 2. salesmen were actually experts (the craftsmen for example) who had a real expertise and could efficiently advise consumers depending on their needs and budget. Today, most salesmen are only here to make money and don't really care about the consumer's needs, which means we need to make the research ourselves. Fortunately, even if we can't become experts in everything we buy, thanks to the internet we can gather advice from fellow consumers who have experienced the products or are experts. It does take time though.

      I also agree that, for some price points - like the 2000€ bag - it is clear that the consumer pays for the brand, the design, the notoriety of the model rather than the actual value of the item. It is a question of choice on the hands of the consumers. I personally have no problem with a consumer who is aware of what he pays for, and chooses to pay for it anyway. What concerns me is consumers who are lured by marketing tricks and think they are paying for something (quality for example) but the product finally doesn't deliver.

      I have also noticed that higher income makes the acceptable price range higher. It makes sense. The price range of the people we hang out with have an effect on our own price range too. If you have a lot of people around you who pay 2000€ for a bag, you'd be more tempted to think it is OK, than if everyone around you pays no more than 200€ for a bag. To me, the important is to consciously consider what factors impact our price range and adjust accordingly...

  6. you're so right that being mindful and making informed consumption purchases requires a lot of time and effort. it has taken me years of shopping mistakes to get to the point where i have a good enough sense of fabric quality / fit to make savvier purchases on both inexpensive and pricy pieces.

    it's disheartening to see something lovely on the rack, only to examine it up close to find that it's primarily a synthetic material / dry-clean only and yet the price is ridiculously marked up. keeping in mind that quality exists across the price spectrum is a good first step to buying 'outside the (marketing) box'.

    1. Yes, I guess the "expertise" for certain types of items comes with time, purchase habits and past experiences. I think that it can be an extra work at the beginning when you are starting, but after a few years, like in your case, it becomes more natural and automatic and doesn't take that much time anymore.

      There are also great benefits to knowing your taste/requirements and buying the appropriate pieces. As you say, being aware of the "real" price range for quality items helps making a first step toward more informed purchases too.

  7. I'd like to add a general comment on this post. While what you say is definitely true, and worthwile, I think shoppers should also be careful not to go too far in the opposite direction. That is: always assuming companies are out there trying to maximize profit and cheat customers out of their well-earned money. I don't want to be naieve but I work in the private sector and I don't like this previous attitude which many people tend to flaunt. Price setting is very complex and companies, after all, need to make a profit if they want to stay relevant, innovate etc.... And for myself as a customer, it can take the joy out of shopping if you are continuously feeling cheated out of a deal (e.g. paying full price for something when there seem to be outrageous discounts all of the time).
    So despite my reservations I completely agree with you that transparancy of the production chain is something to be strived for, and that it's best to set yourself a budget so you have sort of an 'inner' standard instead of all of these outward standards (marketing, discounts, your peers) to use in decision making.

    1. This is defninitely a good point to raise, and another problem related to consumer's price perception: all these cheap, mass manufactured objects have biased consumer's vision of what the right price is. Yes, luxury brands have biased it by artificially raising the prices, but cheap crap give consumer a wrong idea of the real value of work, and what it really takes to make an object. When you are used to buying 15€ earrings from H&M, how can you understand that a craftsman who pays for the raw material and spends hours crafting their pieces want you to pay 100€ for it?

      I agree with you that setting a price point for an item is a complex process, I only touched one of the issues in this particular post. And not all companies are making tons of profit and ripping consumers. I think that is the reason why it is so important to try and have as much information as possible on where the item comes from and how it was made. I have no problem paying 100€ for a silver chain made by my jewelry designer friend (or any other jewelry designer I wouldn't have a personal link to), but I wouldn't pay 100€ for a mass produced silver chain (like these Pandora charm bracelets things? I don't think it's worth the cost).

      Anyway, it's a very interesting point to raise, thanks for bringing it up!

  8. First of all--what! You pay 1 euro for a loaf of bread? That's like $1.40 U.S. Here, for a loaf of store-bought, pre-sliced whole wheat nothing-special bread it's about $3 a loaf, and more like $4 for the fancy stuff.

    Second, a great reminder of high price does not equal quality necessarily, and the frightening mark-ups that many things undergo before the consumer purchases them. I've been enjoying my sweaters from Icebreaker and Smartwool, as they are merino wool "tech" clothes with flattering cuts, and, just as importantly, high-quality material that does not pill, stretch, shrink, or otherwise wear poorly. My $110 Smartwool sweaters are wearing much, much better than my $180 J. Crew cashmere sweaters, which I used to live in. I just recently discovered Icebreaker's merino t-shirts and am really impressed. It's amazing how much money you save when you aren't constantly cycling through clothing and having to replace it due to shrinkage/staining/wear.

    1. Well, 1€ is for the basic 250g baguette of bread, the stick type. If you want to go for a proper loaf, sliced or not, it is usually closer to 3-4€. My favourite bread is a linen seed & organic flour loaf, and I pay 2.8€ for a quarter of loaf. So, yes, bread got expensive... In Japan, a baguette was 300 yen though (about 3€), but that's because France is hype there :)

      I can't agree more with your Icebreaker example! I think it is also satisfying to see that the pieces you invest in actually pass the test of time and are perfectly adequate to our needs. We are conditioned to believe that higher price tag is always equal to better quality, and it's important to question this, among the incredible variety of choice we have around.

  9. Great and interesting post

    1. What kind of video game goodies do you make?
    2. I was having this discussion with someone recently about pricing for services rendered. I was saying that people should price themselves where they want to be. If you become known as the inexpensive service person, when you start trying to charge your worth, it will be hard for people to accept. Unless it's done as you described above, slowly over a long while. But if you start out closer to your target rate, then the precedence is set.

    3. A lot of those increases you describe, I used to chalk them up to balancing for inflation. I do know that some companies intentionally create expensive items to preserve the perception of luxury. I believe Louis Vuitton recently.

    1. Thanks! To answer your points,

      1. We have made many different types of goodies - printed T-shirts, USB keys, notebooks, pens, figurines, posters, tote bags... The cost of goods varies depending on the quality of the fabric and finish chosen, and on the total number of items manufactured, but one common thing to all these goodies is that the cost of manufacturing is always very low compared to how that type of item is priced in stores (even if those I produce are not for sale so I can't compare the exact same product).

      2. Yes, I agree with this. The price point you offer sends out a message to the clients - the psychological price - and if you sell your service or items cheaper than what it should be, people will have an image of lower quality, even if the service rendered is top notch. Besides, indeed, they will perceive the price increase negatively. But setting a too expensive price point when you are not yet well-known is also complicated because you have less clients. Finding the proper balance isn't always easy.

      3. Of course some of the price increases are linked to inflation and/or the raise of the price of raw materials (for example gold rose a lot lately, so I'm guessing golden jewelry has gotten more expensive as well). But yes, there is the intentional price increase too, especially among luxury, or want-to-be-luxury brands.

  10. Interesting indeed!

    It seems to me that both the very cheap and expensive end of the market are being increased, middle prices are disappearing. I think it causes more problems globally that people are accustomed to very low prices and jump at a chance to buy anything for super cheap, even if it's total crap. It's one reason behind hunger wages and causes a lot of clothes and other stuff being produced which is utter trash. Wasting precious natural resources and causing pollution. But of course the artificial heightening of prices can cause shoppers to go into debt which is not nice either.

    1. It's true that there seems to be a polarization of prices - either offer the cheapest item possible, or adding in some fancy brand image and marketing and inflating prices. I wonder if that mirrors the slow disappearance of middle class in western societies.

      Luckily, there still are middle ranged items that offer quality at a reasonable price (that's the motto of Muji, which is why I like this brand), but it seems to become more rare, and to require more research to find them.

  11. I love this series of posts you've been doing about the story behind the sale, so to speak.

    Sale or promotion prices definitely make me more aware of mark-up (though sometimes those are "loss leaders" - items that stores don't make money on, but that get people into the store to spend more overall), as do employee discounts (ask around and you'll be amazed by the % off that employees get, it really makes you think). I worked for a clothing store and got 60% off my purchases. I'm certain they weren't selling to me at a loss - I think the employees were a pretty big source of revenue, actually.

    The term you're referring to is "price elasticity" in English. In economics, price elasticity represents how sensitive demand is to price. Some goods tend to be inelastic - people will buy them no matter what (those tend to be necessities) and a lot of goods are elastic - demand responds to price.

    1. Until very recently, it was forbidden in France to sell at a loss, even on sale. Knowing that sales can offer up to -80%, it really makes you think indeed. In that situation, what annoys me the most is not that retailers are trying to make me pay a lot (I can choose not to buy the item if I find the price too high), but the fact that the purchase price on their end is so cheap, and it's the middle men and retailers who take all the money while the workers and raw material providers get peanuts. It feels terribly unfair, and, as a consumer, rather than price itself, I am sensitive to "local" initiatives that cut middle men as much as possible, like for example the vegetable baskets we can buy right from the farmers. I am sensitive to initiatives like fair trade too, although I heard it's not quite as perfect as it sounds.

      Yes, I think what I'm referring to is price elasiticity - your definition matches it. This is one of the criteria companies use to set their prices, and, more importantly, their price variations through the years.

  12. I'm a little bit late to the conversation, but thanks for sharing such an important and interesting part of price :)

    Something I find quite fascinating is the desensitization that seems to happen in relation to prices, both high and low. If we spend enough time around very high or very low prices, we seem to get so used to them that they seem quite normal, even if we would never have considered them normal before. I noticed this at work - I work in a relatively high end clothing store, and spending a considerable amount of time selling expensive clothing definitely makes you think paying that much is to be expected. I talked about this with the guys I work with once and they admitted that it's quite expensive but they don't realise this most of the time.
    It also seems to apply to very low prices too, and I think this is where those super low prices you see at Primark, H&M etc. have conditioned to make people think that clothes for a few euros is normal and to expected. And anything above that is a rip-off. It's definitely interesting to think about our perception of price!

    1. Yes, I agree it's frightening. I actually experienced it first hand when I went to Japan for one year. Studying in a high end school + having a different currency changed my perspective on "acceptable" prices a lot in only months, and I didn't even realize it.

      For example, before Japan I would find 50€ expensive for a bag, and after Japan I could spend 250€ without batting an eye. I think the worst part is when you find that out, and realize your own standards have been messed up subconsciously, it's quite crazy.

      That's why I read things about brain biases and the psychological part of purchases. There are so many parameters we are not aware of. I'd need to check my numbers but I remember something like 60% of the reasons for a consumer's purchase decision are actually subconscious.

  13. I was just in London where after falling in love with and wisely putting back a 795 GBPjacket, I found a 390 GBP jacket very reasonable! That's the power of the mind for you. No I did not buy the 390GBP jacket either because a) it was a consolation prize for the more expensive one and b) i don't get much wear out of jackets.

    I think when I've fallen in love with something, my mind expands its boundaries of what an acceptable price is. You sacrifice a bit of rationality when you decide to buy a Saint Laurent bag (or anything in that price/designer category), as I did last year, because you know the cost of making that bag must have been grossly inflated. In the case of the Saint Laurent bag I thought the materials and workmanship were certainly several cuts above a high street or a mid-level designer bag. But even so the final price surely cost many many many times more than it did to purchase the materials and employ the craftsman to make it. But I bought it because I loved it and because whatever it is, it was certainly not poorly made. Of course I would feel differently come the day it's exposed that Saint Laurent makes their bags in sweatshops.

    It's the same with an expensive shirt I bought some years ago. Tear out the label, and well-made as the shirt is, I couldn't say it was that much better than a less expensive one. But I bought it anyway because I loved it, I believed in the designer, and it was at the very least, really nicely made.

    I configure different acceptable prices for different brands based on my feelings of affinity for the brand/maker, their aesthetic, and knowledge of their values/ethics as a manufacturer. I guess that means I'm constantly having to guard against any irrational feelings and know when something truly isn't worth it!

    Nice post, as always.

  14. I definitely think about this a lot. If you take a look at where your clothing was made, you can really get an idea of what it actually costs to make. For example, say your in f21 and there is a 15 dollar top. Divide that by half, that is usually the markup of just the store. So the store usually makes 7.50. 7.50 then goes to the label. You then divide that by about 3 + profit. So say they definitely wanted to make 2 bucks profit on that shirt, that means 5.50 was used to "make" it - a 1/3 to design expenses, a 1/3rd to the sewing manufacture, and a 1/3rd to fabric. How much of that 1.83 do you think actually goes to the sewer who makes 35 dollars a month at most in india?

    I will buy $20 dollar tights from J. Crew because they are made in italy and they fit me very well, like no other tights I have tried on. I cant wear the cheap target brand without wanting to cut them open with scissors. But some people are more picky. I know they feel much better quality of material and they are made in a country where i know, no one is getting paid $35 a month.

    Sometimes my boyfriend will buy an 80 dollar shirt from J. crew because he is narrow shouldered and slim and its hard to find something that doesn't dwarf him. J. Crew generally fits his body type best. The women's wear there doesn't generally fit me at all, so i shop elsewhere. I find f21 fit to be best for my body type. I have clothing that has lasted many seasons from both f21 and h&m but i take care of my clothes and am a seamstress, so fixing them is no problem. If I like the fabric, Ill buy something to cut it up, because its cheaper than buying fabric in stores!

    anyway, thankyou for this thoughtful post, there are so many factors to brands and prices that are often hidden from the regular consumer. Its best to be armed with enough knowledge to understand.

    -sarah sky

  15. Yes, to all these thoughtful comments. And this is why I buy 99.99 percent of my clothing at thrift stores. It's easy to find basics and every of often I find a jewel, like a silk Armani Collezioni blouse for $7.50. I buy used clothing primarily for environmental reasons. And I like the hunt. And I have the time. It's not for everyone.