Step 7: the price to pay
In a perfect market, all identical items would carry the same price and if supply and/or demand changes, so would the price. That is the basic pricing principle first described by Adam Smith (1776) in The Wealth of Nations. The principle of market pricing is still valid but in its pure form rarely applies.
First, not all products are the same for everyone, one may prefer green another blue. The one preferring green will pay more for that than the blue one, and for the other individual, it is the other way around. A naive but real example, ask any car dealer with a showroom full of cars in the 'wrong' colour. There are also many other issues influencing the price. The timing – does the customer need it now or later so is there time to look for alternatives. The place – most consumers will pay more for a drink in a restaurant than in the supermarket, as illustrated previously. The features – a piece of furniture delivered and installed by the store will cost more than one that is flat-packed and taken home in a rented trailer.
Markets are not perfect. The people involved do not possess perfect information, they may not have access to many alternatives and above all the available alternatives are rarely identical. If the marketing departments have done their job properly, each product and service should be perceived as different from the others and thus not subjected to a direct comparison. While the principles of Adam Smith do apply, in reality each individual makes his or her own price value comparisons, and on the basis of the individual assessment makes a decision whether to buy or not.