In the Zagreb neighborhood of Vrbani, an apartment measuring 38 square meters is for sale for €370,500, or €9,750 per square meter! No, it is nothing super luxurious; the apartment is in a completely ordinary large residential building that is about twenty years old and furnished with cheap used furniture, but the seller is completely in trend when it comes to the pricing model that is super modern in today’s Croatia: if it goes, it goes (APP)!
The ‘if it goes, it goes’ model in pricing could be defined as a strategy in which the seller deliberately sets an absurdly high price for what they are selling, hoping that some fool will accept it. If there are no such fools, the price can always be lowered to a level where there will be more potential fools. If there are still none, another round of price reduction will further increase the pool of potential buyers. The goal is to test the limits of the market’s willingness to pay the listed price and subsequently stimulate sales with discounts.
‘And that will be enough’
It is incredible in which segments of product or service sales today we can encounter examples of APP pricing. Recently, we urgently needed plumbing service to perform a job that we estimated should cost around €150. The plumber who responded to our call the fastest looked at what needed to be done and then quoted us his price – €600! We told him that was too much and that we would agree to pay €200 for the job. He agreed without hesitation, just shrugged and said, ‘and that will be enough.’ Later, we regretted not offering him even less. Maybe he would have accepted.
The APP pricing method is particularly prevalent in furniture showrooms. If you watch domestic television programs, you cannot help but notice advertisements with the message that some of the showrooms from this or that retailer are celebrating a birthday, and on that occasion, prices in some categories are reduced by 30 percent across all chains of that retailer. Or that the retailer has a promotion called ‘kitchen week’ during which kitchen prices are reduced by up to 70 percent. And similar things. There is also another trick. If, in fact, a seller in a furniture showroom assesses that you are a serious buyer but you hesitate to purchase because you think the regular price is too ‘inflated,’ they will discreetly offer you a discount equal to that of the promotion, regardless of whether there is a promotion at that moment. And you can also haggle and ask for an even larger discount than the one they offer you. Sometimes that ‘works.’
