Hey Pricing Gurus,

Author Dan Ariely has a new book out called Predictably Irrational: The Hidden Forces That Shape Our Decisions.

In it he says...

People almost never calculate an ROI to decide if something is worth a price.

Rather, they compare the price of an item to other things, and establish a relative value, not an absolute value.

He gives a wealth of examples. See the image below. Imagine how different the results will be if you take out the middle choice.



So, for your business or the businesses of your clients, what are the pricing implications of people assessing ROI in relative vs. absolute terms?