The price of a product is a temporary indication of the worth of that product considering the market forces at that particular point in time. It can be above and below its value. A discount is a situation where the price may be* below its value while a premium is a situation where the price could be above its value. Value of a product usually depreciates over time and through usage. There are 3 scenarios where value increases over time:- (i) scarcity (ii) complementary value has increase (iii) inflation. A premium price is paid to a product if the satisfaction derived from the consumption of a unit of that product is high. But that premium price paid may not create value for money. Price of a product is usually distorted by marketing ploy and sales tactics. A person's ego is affected by the satisfaction derived from the purchase of that product. Value can also be evaluated by the rate of return from the purchase of an investment.
*Note: I use the words "may be" because many a times, merchants will use the word discount freely when in fact the price covers the cost of production, reasonable profit and premium dollars.
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