Why do we pay what we pay?

Why are digital products priced the way they are? How much do we value our digital banking apps, our Netflixes and our Dropboxes? What price are we willing to pay for the ability to send a payment request? To resume a video? To upload a file?

It’s easy to think that products and their features have some kind of intrinsic value, and thus a logical price.

But if we look at food, we see that that’s not the case. The price of food is not simply the price of the product plus some margins for distribution and retail.

When it comes to (packaged) food in the supermarket, we don’t pay for the food itself, but for how it is marketed to us. We pay what the sellers can get away with charging us, as my favorite Dutch TV show ‘Keuringsdienst van Waarde’ so often excellently shows.

When we buy baby carrots, we’re buying regular carrots cut and polished into small carrots. Same thing, but we pay 4 times as much.

When we buy baby beetroot, we simply buy small beetroot that were filtered out of the harvest, and pay twice as much as the regular beetroot (which were filtered out in the exact same process). Baby beetroot are cuter and therefore more expensive.

When we buy vegan yoghurt, we buy a product that takes the same effort to make as real yoghurt, but is priced 2x or even 3x. Because vegan.

So what we pay is not the product itself but how we value it. And apparently what we value is marketing.

With digital products becoming more and more of a commodity, does the same apply? Are we paying for actual value, or for perceived value? When we pay for a banking app, a video streaming service or a handy productivity app, are we paying for the “raw functionality” or for how it is marketed and packaged to us?

In other words, are we paying for the story about the product that is told to us?