Why are people willing to only buy something once if it is more than a certain price?

Question

This keeps happening to me. Why are people willing to buy a product i make, if i charge more money, but completely want to pay less and less if i charge below some price? What is this effect called?

It is strange. I would expect that people will be oppurtunistic about something with lesser price and buy it right away. Instead they wait or try to negotiate for it to even decrease. However, if I charge a heftier price, they want to buy it right away. What is the economic rationale behind this behaviour?

Answer 1

The determination of the 'price point' is a major part of product development. Many companies sell similar products at different prices to appeal to different market segments. A quick answer is that to certain individuals, a higher price indicates quality, luxury, use of the best materials, and status.

If everyone could afford a Rolls Royce, the rich would drive something else.