The Punishing Precision of Price Walls

In 1970 the popular VW bug carried a suggested retail price of $1,839 and held a firm position in the minds of US drivers as a great value car buy at about $2,000. It’s also probably represents one of the best early examples of the importance of price walls. $2,000 was not chump change back then and indeed in today’s dollars is equal to almost $14,000. Still it represented a very fair bargain especially for the shopper who was looking for a reliable no-frills mode of transportation. But according to the law of price walls the VW Bug probably would have seen a significant drop in volume if its base price exceeded $2k and conversely also could have sold almost as many units in the US if its base price was $1,999 versus the actual $1,839.

Robert Tinterov is the CEO of one of the leading global pricing companies, Atenga Insights, which is headquartered in Sweden with a US office in California.