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.
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?
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