The surprise bestseller of my first three weeks as a world retailer is a glass water bottle with a glass stopper that goes for $5. All vendors here were asked to offer one exclusive for the market and I chose to mark them down from $12.

I have a theory that most people are glad to pay up. Set the price too low and the bad connotations of "cheap" enters the buyer's calculations. At the extreme, a giveaway is considered of no value.

Exceptions exist. Children still believe things are free, living as they do in the golden time of innocence. Business minds like Chair will demand a 50 percent discount as a matter of course, being familiar with markup conventions. Chair also says buyers are vulnerable to Schadenfreude and are particularly happy with the idea that a purchase will come out of the seller's hide, completely without profit. And some people, as shown by my water bottles, find pleasure in being shocked by an unexpected bargain. "That's my bottle!" cried an ingenue. "I bought mine in Paris for $30 and broke it!" She was so happy to find the bottle that she overcame any disgust at the price. Perhaps she imagined herself at a Parisian flea market.

I am always experimenting with prices. If someone says, "That is so cheap!!" I mark the price up 50 percent as soon as they clear the door, if they don't buy. The same bottle that goes for $50 one day might be $40 the next and $60 the next.

I love people who bargain. We are collaborators then in the comradely game price discovery.

A deep exposition of this can be found in the Spec classic Horse Trading by Ben Green, recommended to us by a Yale games theorist and professor of great sagacity.


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