Why are people unable to valuate random goods accurately?
When one goes to a supermarket to purchase daily goods, one can gauge the price accurately. The frequent visit to the store trains one to be sensitive to the pricing. The ability could be helpful, especially since the store intentionally marks up the commodity price.
Unluckily, it doesn’t happen in every single store. The pricing won’t become precise when one is unfamiliar with the items. It occurs when one goes to a computer store or furniture store. A person needs an additional understanding of technical or artistic sense to evaluate the products accurately.
An understanding of the product does not necessarily make one price an item correctly. When the general market lacks specific knowledge of a product, the pricing will significantly differ from the supplier costs of goods and based on the impression given.
Therefore, familiarity and the beauty of a product play a pivotal role in stigmatizing people to purchase an item that is much expensive than it should be. It is not necessary due to the quality of the products. as human plays a role as both rational and irrational creature,
Moreover, the lack of information also contributes significantly alter the verdict. A comparison is helpful to know the price range. Yet, one still need to have specific knowledge of the products to have an accurate valuation.
Ultimately, one may have a poor ability to price an unfamiliar item. To alleviate the inability, getting specific knowledge, comparison, and removal of bias can be an approach to value goods properly. With these actions, one could prevent unnecessary spending.
What is your approach for pricing a good?