“When presented with a choice between a smaller dollar amount now or more money weeks later, savers focus immediately on the two dollar amounts, quickly screening out other factors as irrelevant — as revealed by their eye movements.”— Money-savers Focus Attention (Duke Today)
My $0.02: When you’re dealing with someone who values lower prices above all else, they’re not going to stick around. Their motivation is getting the best deal, and if they can’t get it, they’ll go somewhere else.
It’s a race to the bottom in a fight for fickle customers.
If you’re able to consistently offer the lowest prices, you’ll need a lot of volume to hit the same revenue that someone else gets from fewer sales. You either do this through scale or through efficiency.
If you raise your prices and go for fewer sales — but still hit the same revenue — you can put more focus on quality and customer retention. But how high do you go?
Again, IMO: You go as high as you can so that your ideal customer can still afford your products or services.
At a certain point you’ll cross the line into a different market segment, and the customers in that segment may not be the type of customer you want to reach.