Higher prices make people expect better experiences, even if the product is identical. When you price something cheap, customers tell themselves a story about why it's cheap, and that story shapes how much they enjoy it.
Chapters
If something we're looking to buy doesn't cost much, or is even free, we tell ourselves it isn't worth very much. We have an implicit and often unconscious bias that equates the value or quality of something with how much it costs. For example, if we order a moderately expensive bottle of wine at the restaurant, it makes us believe the wine is going to be awesome even before we've tasted it. Spending a bit more on a car makes us believe it's going to handle better, be more luxurious. Or maybe more reliable. If something costs more than its rivals, a part of us thinks, "Well, why else would someone buy it if it wasn't worth the money?" When you buy something that costs more, you tell yourself a story about how good it's going to be and how much you're going to enjoy it. So if you charge less for your product than it's worth, what story do you think the customer is going to tell themselves?