Don't underestimate the value of high prices. People often think they're getting something better when they're getting something they could have bought something better for less.
In the words of multi-billionaire Charlie Munger: Talking about economics, you get a very interesting phenomenon that Iâ€™ve seen over and over again in a long life. Youâ€™ve got two products; suppose theyâ€™re complex, technical products. Now youâ€™d think, under the laws of economics, that if product A costs X, if product Y costs X minus something, it will sell better than if it sells at X plus something, but thatâ€™s not so. In many cases when you raise the price of the alternative products, itâ€™ll get a larger market share than it would when you make it lower than your competitorâ€™s product. Thatâ€™s because the bell, a Pavlovian bell â€” I mean ordinarily thereâ€™s a correlation between price and value â€” then you have an information inefficiency. And so when you raise the price, the sales go up relative to your competitor. That happens again and again and again. Itâ€™s a pure Pavlovian phenomenon. You can say, â€œWell, the economists have figured this sort of thing out when they started talking about information inefficiencies,â€ but that was fairly late in economics that they found such an obvious thing. And, of course, most of them donâ€™t ask what causes the information inefficiencies.