From Seth Godin’s Blog:
Money’s pretty new. Before that, we traded. My corn for your milk. The trade enriches both of us, and it’s simple.
Money, of course, makes a whole bunch of other transactions possible. Maybe I don’t need your milk, but I can take your money and use it to buy something I do need, from someone else. Very efficient, but also very abstract.
. . . .
Most of the time, when we’re buying non-commodity items, we’re asking ourselves questions like:
- How much pain am I in right now?
- Do I deserve this?
- What will happen to the price in an hour or a week? If it changes, will I feel smart or dumb?
- What will my neighbors think?
- Does it feel fair?
- and, What sort of risks (positive and negative) are involved? (This is why eBay auctions don’t work for the masses).
Pricing based on cost, then, makes no sense whatsoever. Cost isn’t abstract, but value is.
Link to the rest at Seth Godin’s Blog
Indies talk a lot about ebook pricing. Big Publishing complains that Amazon and indie authors have devalued books. PG agrees with Seth that, at bottom, value is abstract.