Pricing Theory: A Senegalese Watermelon Stand

How do you decide how much your product should cost? Hint: You should be thinking about the customer, not the product.

At its core, pricing is an exercise aiming to determine the value you’re offering the customer. If you can match that value in price, you’ve succeeded. But quantifying the value to the customer is the real challenge, and one that requires true understanding of your customer, not your product. I’m going to discuss Costco and a watermelon stand in Senegal to illustrate why understanding the customer actually matters more than your…