Lars Lofgren wrote a very good piece on QuickSprout about the psychology of pricing. The article is very much worth a read for those selling names both actively and passively.
While a lot of the techniques are geared more to a tangible product, it still provides some solid insight for domain investors.
From the article:
Price Vs. Value
Is price a measure of value? Not necessarily, says a study conducted in 2008 by Goldstein and team. The study found that people “do not derive more enjoyment from more expensive wine” when they don’t know much the wine cost. According to another study, however, there is a clear correlation between price and perceived value. When participants were told that a wine had a high price, participants gave that wine higher ratings.
The study took its analysis a step further by examining actual neurological responses to this wine tasting activity.
When told that a wine was more expensive, study participants experienced higher activation in the brain regions associated with feelings of pleasantness. To some extent, consumers are letting price influence how they feel about products and services.
