Pricing is a very interesting topic and I think this discuss is very interesting, too.
I would like to point out the government only spends based on budgets. If they go over budget they raise taxes and/or fees, like transportation costs. Seems to be the only thing they know to do. When was the last time you heard they were going to lay people off to bring costs in line with revenue? I was once told at a national postal meeting (when I made the mistake of suggesting that something would help them sell more postage) that they didn`t care if they sold more postage. They then explained that they only wanted to meet their budgets. So what can I say?
When it comes to real world business, the study of human nature concerning pricing is very complex. In fact, there are some situations where increasing the price will actually increase sales in both dollars and volume. This is because there is a certain expected value people will pay for something. If you under price your products and service, customers will be afraid that what you are offering is not good enough even if it is the best thing in the world. Priceline.com is a good example of taking advantage of human nature. They know that people are willing to bid too high for things. It is all perceived value.
The real point is pricing for anything must be researched, tested and adjusted to get it right for each market where you sell product or services. And sometimes having higher prices, if they are the right prices, will increase the number of customers you have.
Bert at Harvey Software, Inc.
Multi-Carrier Shipping Software and Supply Chain Solutions for Internet Retailers
Also a provider of free shipping information and resources at Harvey Software`s Parcel Shipping Blog along with free tracking solutions at TrackingPage.com...