In the process of selling all of my furniture for the move to a furnished condo in Texas, I’ve learned something very interesting about pricing. I had read about the effect before, but never experienced it so clearly.
It seems that for a lot of items, their demand curve looks almost like a cliff, where demand is near zero until you cross a certain threshold, then increases quickly to infinite.
For instance, I first posted some items on Kijiji at a high price since I wanted to continue using them right up until I moved. I then dropped the price, bit by bit to gauge demand. In every case, the first few drops did nothing and I had zero inquiries
Then, all of the sudden, I would cross a threshold where the emails started flooding in – sometimes only a few minutes after I posted.
This is a really important lesson for anyone who sells a product or service. If you price it just slightly too expensive you might sell nothing, whereas only a small price drop could sell out your entire inventory.