the $25 burger signals that your restaurant is capable of making a burger worth $25 to someone. this then reflects well on the care you take with your cheaper offerings. of course in reality the relative qualities of product offerings can be completely unrelated, but our monkey brains are not objective. thinking that nerds are free of bias is a bias :)
I don't see how a $25 burger on the menu signifies that $25 burgers are selling. Especially in the IT industry. It's normal for vendors to have 'list prices' that are 50%-70% higher than what you can negotiate them down to. (seriously. talk to a small business who has bought a new NetAPP or EMC storage device.)
Also, yeah, we are all biased, even nerds. I'm sure you could, for a short while, trick nerds into paying more because of those biases. But I'd bet money that they'd figure it out, probably sooner rather than later, and they'd be mad at you.
If you are selling to the middle managers who tell nerds what to do, it's different. But I'm a long ways from being able to hire someone who can pull off that sort of thing.
another difference is that the $25 burger is signaling "this is not like other burgers. this can not be thought of as a commodity; this burger is /special/"
First, like I said, smart business owners base their businesses on commodities they can get from multiple vendors.
Second, All of my marketing is focused on saying 'Hey, you can treat what I'm selling like a commodity.' - the thing is, I am selling something that is fairly similar to what my competitors are selling. But my competitors are good at marketing, and they charge quite a bit more than I need to. It's in my best interest to not differentiate, to instead say 'Hey, I'm kind of like those guys over there' - I want to turn the market for what I'm selling into a commodity market. Sure, a commodity market is best for consumers, but in my case, it's also better for me, because it slashes my marketing costs. I mean, it's not entirely fair to my competition, I am benefiting from the work they have done to introduce people to this class of products, but I think it's not unethical. This is just what happens as a market for a particular good or service matures.
From what I understand, marketing costs (or referral fees) have traditionally been a huge portion of the cost of providing shared hosting, and the barrier to entry into this market is only slightly higher.
