A woodworker reframed a transaction from buying a finished product to a collaborative building experience. This shift completely altered the customer's value perception, leading him to happily pay 30% more than the original high-priced item for an imperfect, co-created result.

Consumers determine a fair price relatively, not absolutely, by comparing a product to others in its category. By launching in a tall, thin 250ml can instead of a standard 330ml can, Red Bull prevented a direct price comparison with cheaper sodas like Coke. This change in the 'mental comparison set' allowed it to establish a new, premium price point.

For luxury brands, raising prices is a strategic tool to enhance brand perception. Unlike mass-market goods where high prices deter buyers, in luxury, price hikes increase desirability and signal exclusivity. This reinforces the brand's elite status and makes it more coveted.

Pricing power allows a brand to raise prices without losing customers, effectively fighting the economic principle that demand falls as price rises. This is achieved by creating a brand perception so strong that consumers believe there is no viable substitute.

Price heavily influences a customer's expectations, which in turn shape their experience. A discounted product, like a painkiller, may be perceived as lower quality, leading to a measurably lower placebo effect and reduced effectiveness for the user. The actual experience deteriorates with the price.

When a new KFC premium product wasn't selling, they doubled the price instead of discounting it. This aligned the price with consumer expectations for a premium item, signaling quality and causing sales to soar. Low prices can imply low quality for high-end goods.

You cannot command a high price if the customer's experience feels low-value. Every touchpoint—from the technician's uniform and vehicle condition to the dispatcher's tone—must align. A mismatch in this "vibe check" makes a high price feel unjustified and shocking.

When Nespresso priced a feature-rich coffee machine the same as its basic model, customers grew suspicious. Assuming a hidden flaw in the advanced version, they overwhelmingly purchased the simpler one, showing how price equality can paradoxically devalue a superior product.

Our willingness to pay isn't just about the product's utility. Richard Thaler's "transaction utility" concept shows context matters. We'll pay more for an identical beer from a boutique hotel than a beach shack, even if we drink it in the same spot, because our perception of a "fair" price is tied to the seller's perceived overheads.