You work for an established company that makes woodwind instruments. Your product line of saxophones ranges from student to professional level horns. The vast majority of your buyers don’t buy a more expensive version after purchasing an initial student instrument. How might you best price the entry level version of the saxophone?


Companies may wish to start with a higher price on their least expensive item if they believe consumers will not purchase a more expensive item from them at a later date. If the makers of the saxophone found that customers frequently upgraded to a more expensive model later, they’d have a reason to consider setting a lower price for the least expensive model.

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