Market Prices are Fair Prices

by Don Boudreaux on February 17, 2019

in Prices

A few days ago my friend Laura Clancy e-mailed to a small group, including me, a link to this story on Panera Bread calling a halt to a policy in some of its stores of allowing each customer to pay whatever prices that customer wanted. In the group to whom Laura sent this link were two other dear friends of mine, Betsy and Lyle Albaugh. Betsy and Lyle own and operate, near Dupont Circle in DC, a wonderful boutique clothing store for women; it’s called “Betsy Fisher“.

Upon receiving Laura’s e-mail, I sent this tongue-in-cheek e-mail to Betsy and Lyle:

Hey Bets and Lyle: When are you going to experiment with letting your customers pay for Betsy Fisher clothing whatever prices they think ‘fair’? 😉

Lyle – who, like his wife Betsy, is among the wisest and most insightful people I’ve ever known – very soon sent to me this reply (which I share here with his kind permission):

We already do charge customers whatever prices they think are fair. The way I know that our customers think our prices are fair is that they voluntarily pay them. Who would pay an unfair price when so many alternatives are available?

Touché! Excellent point.

….

Lyle, by the way, is also founder of this amazing enterprise.

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