There are several types of price setting strategies such as Cost Plus and Demand Driven Pricing. Walmart’s success was built on cost plus pricing model. Sam Walton was the founder of the retailing giant of 1990s-2000s. In his autobiography “Made in America” published a few months around his death in 1992, he mentions the example of a toothpaste he was selling at around 2 dollars. He found a vendor who offered the same quality at around 55cents. Managers advised him to sell at around $1.20. Their logic was that Walmart buyers are used to buying this tooth paste at around 2 dollars. $1.2 is a significant decrease. However, he declined. He decided to sell at around 70 cents. His logic was that his CSR is providing consumers with lowest prices. Walmart slogan is “Everyday Lowest Prices”. He said around 10% margin is as per his mission. The toothpaste was sold at 70 cents. He writes in the autobiography, while he was suffering from terminal cancer, that this book will come to haunt those who will try to meddle with his legacy. He was writing in the context of the question that what was his contribution to the social welfare of people. He said his mission was to provide his customers with the lowest price anywhere. This mission had made life easier for millions of mass consumers of USA. The benefits of cheaper prices that he had passed on to Americans is unparalleled.
Imam Ghazali in Ihya uloom in section on “hiding of market/purchase prices” says that it is “against the interest of well wishing of community”. In section on “Ihsan in Maamlaats” says that charging higher than usual profit on purchase price is not recommended and should be avoided. Charging less profit is ihsaan. Ghazali describes the incident of Younus bin Ubaid. He was selling a shawl for 200 darham. He went for prayers. In his absence his nephew sold the shawl for 400 darham. While returning Ubaid saw the buyer with the shawl. He asked him at what price did he buy the shawl. The buyer said that @400 darham. Ubaid said that it is too much. The buyer said I am from another city and there 400 is a good buy because this quality is not available at even 500. Ubaid brought him back to the shop and despite his protestations returned 200 darham. Said
Now compare these examples of Sam Walton of Walmart of 30 years ago and Imam Ghazali’s examples of around thousand years ago.
Now think of high end expensive brands directed at psychological exploitation of consumers mind with obfuscation of needs with wants.