A model of the development of naïve theories of price is presented and tested. The criterion used to account for price variations within a product category is product features at age five, product features and quality at age ten, product quality and buyer utility at age thirteen, and a combination of supply considerations and buyer utility/demand in adulthood. Five‐year‐olds do not justify their use of product features as a price criterion; however, older respondents all justify their price criterion by referring to a source of value. At age ten, variation in the amount of manufacturing inputs is the source of value which justifies the use of product features as a price criterion; at age thirteen, variations in the quality of manufacturing inputs justify the use of product quality as a price criterion; and in adulthood, relative scarcity and buyer preferences justify the use of cost and demand as price criteria.

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