You and your two roommates are starting a lawn service to help put yourselves through college. There are two other well-established lawn mowing outfits in your area. Should you set your price higher or lower than that of the competition? Justify your answer.

One roommate believes the most important objective in setting prices for the new lawn service business is to generate a large profit while keeping an eye on your competitors’ prices; the other roommate believes it is important to maximize sales and set prices according to what your customers expect to pay. Who is right and why?

Is there a difference between a $5,900 Neiman Marcus sweater and a $150 cashmere sweater from L.L. Bean? Have you ever purchased a higher-priced product or service because you thought the quality was better than that of a similar, lower-priced product or service? What was the product or service? Do you believe you made a rational choice?