Which Price is Right? 474
slashdotNum2Big2Register writes "An interesting article at fastcompany about how things are being priced nowadays. The only drawback that concerns me is how each item and price can be connected to an individual. Amazon was already found to be doing this with their prices."
once you know (Score:3, Insightful)
Not surprising that no one will talk... (Score:5, Insightful)
sPh
I don't get why this is such a big deal... (Score:5, Insightful)
Call me old fashion, but I've always seen this as normal. Not necessarily fair, but at least something not entirely unusual, or dangerous, or something to get up in arms about.
More power to them (Score:2, Insightful)
Re:I don't get why this is such a big deal... (Score:5, Insightful)
Well... no. That's bargaining, and I believe it is a different subject.
Usually, a car has a starting price. This is the official price. Everybody starts off the same price and then negotiates a lower one. If you walk into a car dealership and the salesman changes the price after taking a look at your clothes, then yes, it's the same.
Where I live, car dealerships have a "ticket price" on each car displayed. I don't know if they are required by law to do it, tho.
Re:Old Hat (Score:5, Insightful)
Don't forget that state taxes are higher in NY than CT. Sure, the sales tax won't show up on the price tag, but all the other "incidental" taxes (road taxes and tolls, for instance) will. Also, if one store has a higher rent or CMA (Common Area Maintenance), expect higher prices. So the $10 might not be all bilking the customers, there could be higher costs in one area (most likely it's a combination of all of the above).
Re:Amazon shops for me? (Score:1, Insightful)
gay != female
Re:Old Hat (Score:4, Insightful)
Re:nowadays = September of 2000? (Score:5, Insightful)
Not true, in December 2002 we wanted to buy the Band of Brothers video collection for my grandfather-in-law. When my wife and I looked at it (we are frequent amazon.com customers) it was $80. When my mother-in-law (doesn't shop online) looked at it it was $100. Ergo, Amazon.com still does the individualized pricing thing.
The individualized price thing was commonly done in retail until Sears and Roebuck introduced the single price concept near the beginning of the 20th century, allowing them to have more poorly trained sales staff therefore allowing them to make lots of stores very quickly. Very high end and very small volume stores have never stopped doing it since the salesmen/owners at these stores ussually have a good idea what prices their customers can tollerate. Large stores couldn't get to know the customers well enough to do this. Looks like large stores track you well enough to do this now.
Fleecing the poor (Score:5, Insightful)
Financial services to the poor have, all else equal, much higher default risk. And default costs swamp everything else. Consider that the margin over cost of funds for most consumer credit is 2-3%. A default rate of 1% destroys the profitability.
And the proof of this is in the market. Credit companies are neither bashful nor shy. If there was money to make, your friends and Cap One and First USA would divert some of 1 billion or so peices of mail then send. Alliance capital tried and went bankrupt. Cap One tried, but was punished in the stock market for the risk.
The other minor effect is transaction costs. There is a smaller denominator to spread costs across. 1% of an $800 paycheck is different than 1% of a $200,000 mutual fund purchase.
This reminds of the myth about women being paid around 70% of what men are. If true, there must be someone out there hiring only women and killing their competitors with wildly lower labor costs. Ought to be easy, women are around 40% of the labor pool.
Oops. Doesn't seem to be happening. I know I'm willing to try it.
Shop at the dollar store (Score:5, Insightful)
But seriously, objective pricing probably is gone. Why? Well, we've transitioned to a service-based economy, and it's difficult to stick a price label on an intangible product (intellectual property, anyone?).
What makes a copy of XP Pro worth $299? Nothing. The box and the disks themselves are probably only worth a few bucks. And people know that MS runs 85% margins on these things, but still continues to buy them. And when so much of the economy is based on sales of intangibles....
Same goes for getting work done on your car. How much money does a head gasket cost? Well, the gasket, itself, is under fifty dollars. How much does a head gasket job cost? That's a different question entirely, now isn't it?
Re:Airline Pricing..and others (Score:3, Insightful)
No. Frequent flier miles are tied to the name on the ticket and not to a corporate entity. If the airlines allowed corporations to accrue miles as opposed to individual employees, then the corp would purchas far less tickets with actual money, and far more with mile, hurting the bottom line.
airlines created their own mess by chaning prices (Score:4, Insightful)
everyone does this. (Score:3, Insightful)
International businesses charge Americans more than they charge someone who makes $2 a week.
students get discounts on almost everything
ladies get in free on Thursdays.
etc, etc, etc...
Re:Doesn't work for educated consumers (Score:3, Insightful)
Re:Shop at the dollar store (Score:2, Insightful)
Auto repair is a bad example, as mechanics have a big book of repair jobs, and how many man hours can be charged for each one. It's like Kellys Blue Book but lists fair market value for repair work.
I'm sure someone else can fill in the details, but I know it exists, and if your mechanic isnt using it and is pulling numbers out of the air, he's a crook and you should go somewhere else.
Re:What I do with Amazon.. (Score:3, Insightful)
The poor pay more... (Score:3, Insightful)
This needn't be inconsistent with convential economics --- the poor have little bargaining power and few alternatives, which leads to higher prices. For example, poor people could pay more for groceries because they don't have transportation to other, cheaper grocery stores. There's no reason for a store that has a large percentage of people walking (as opposed to driving) in to compete on price. The empirical evidence on whether prices for groceries in poor neighborhoods are higher is mixed. In addition, poor people often have limited access to produce and some staples, because smaller stores located in urban areas limit their items to high margin highly processed food.
Wal*Mart vs. Microsoft (Score:5, Insightful)
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What else? Well, what about Microsoft? Its margins are--can this be right?--44%, and it's sitting on $38 billion in cash. Mr. Sam would not approve. Log on to walmart.com and you'll find $199 computers powered by a fledgling Windows competitor, Lindows.
That's the Wal-Mart position. Either Microsoft is going to have to cut their prices, margins, and profits, or Wal-Mart is going to undersell them with Lindows. It's going to be an interesting battle. The outcome may be a special low-end version of Windows for Wal-Mart.This is important for open source. Wal-Mart likes generic products and price competition. No one supplier gets 100% of a product category at Wal-Mart. Start thinking "Linux for Joe Sixpack".
Re:Does anyone else see a (Score:3, Insightful)
Best explanation of price discrimination (Score:4, Insightful)
James Boyle is, apart from being a very smart economist, one of the Good Guys in the copyright debate. His paper explains why price discrimination happens and some of the effects it produces.
Rehash (Score:5, Insightful)
This is rehash of an old, flawed argument:
1) Assume that the labor market is perfectly competitive.
2) Assume that competitive markets will eliminate wage disparities between equally qualified men and women.
3) Observe that wage disparity exists between men and women.
4) Conclude that "unobserved differences" between men and women explain the wage disparity.
What justification is there for assumptions 1 & 2?
One point of the article is that businesses can make themselves better off by segmenting the market and selling products to different people for different prices. If businesses can do this when it comes to selling products, why can't they do the same for buy products, like say, labor?
The argument that markets will eliminate wage differentials based on gender or race assumes perfectly competitive markets composed of identical goods with many anonymous buyers and many anonymous sellers with full information available about the quality of the products and all prices. Every single one of these conditions is absent in the labor market.
Re:Frequent Flyer Miles (Score:3, Insightful)
It's very standard practice.
I travel quite a bit as part of my job. No less than 3 weeks every 2 months on the road, usually more. These trips are usually for a business week at a time, and require me to fly on MY time, i.e. Sundays, and sometimes Friday night red-eyes back from the left coast.
The miles are some of the things that make the job worthwhile. I could make just as much money, sitting on my ass writing code. The miles somewhat make up for the fact that I'm away from home for extended periods at a time. Too often people who never travel for work, or maybe take one business trip every two years, look at it as glamerous. It's not. It's work, only, unlike you, I dont get to go home at night. I drive my rental car back to my hotel, eat in the lobby and watch a movie on my notebook.
If I wasn't at least getting the miles for my trips (which pay for my vacations), I wouldn't be travelling.
Simple enough.
Re:Airline Pricing..and others (Score:3, Insightful)
Different cars cost more, different jobs cost/pay more.
Now, if your example had the contractor basing his rates on the company name, that would be a fitting example.
If I were you, I'd post as an AC too, out of embarassment.
Re:Airline Pricing..and others (Score:3, Insightful)
Of course those services are available to the rich. The rich don't use them because they have better alternatives that are not available to the poor. That's blatantly obvious to anyone who looks at it for more than a couple minutes, and especially to someone who's had to bootstrap themselves up from poverty. It's really, really hard.
Re:Frequent Flyer Miles (Score:2, Insightful)
FFMs encourage additional trips (airline revenue) by providing a nudge toward flying when the need might be on-the-fence or justifying "impulse" flying. This has an immense benefit for airlines, of course. The benefit to the company is that employees don't revolt against necessary travel. I can tell you from personal experience that flying day-in and day-out (in my case daily, up-and-down the US west coast for several years) loses its romance very quickly and becomes little more exciting that a daily car commute. At some point I might have tried to find excuses for skipping a trip if I wasn't getting FFM (I wasn't on commision). If it helps think of FFM as like a fee paid by airlines and company to the employee for enduring the hardship of frequent flying.
There are other benefits: for example, allowing a spouse or SO to come-along on a business trip because of FFM is a major productivity and morale boon that benefits the company. Even from an accounting perspective, the business trip cost for the employee are a sunk cost and the spouse's cost is largely covered by FFM thus it is largely cost neutral to the company. If the trip is for vacation, vacation time is already a sunk cost for the company, and in fact, the vacation time is on the company books as an unrealized accrued expense which has negative tax implications until it can be realized. There is a benefit to the company to having the employee take the time off, and if FFM are the lubricant that does that, so much the better.
As a side note: I've been wondering how much economic impact does the added airport security have due to preventing marginal or impulse flying? I haven't run the numbers but it would not surprise me if 20-30% of the current economic downturn could be explained by it. I used to routinely hop on a plane with only hours notice and zip up to Seattle or down to San Diego. A certain percentage of the time (1:4 or 1:5) a deal in 6-7 figures would close as result. That kind travel is completely impossible now.
In general, most of the security added is probably marginal in terms of effectiveness but certainly "throughput" of most processes that depend on travel are significantly slowed. Most of the economic growth of the last two decades is due to productivity improvements related to JIT manufacturing (which has been seriously crippled by travel security) and due to increases in "turns" (sales, inventory, etc.) of all types (which are reduced by slowing things down).
Re:What I do with Amazon.. (Score:3, Insightful)
Sure you are. You can't discriminate based on sex, race, religion, etc... but anything else is fair game. Now, I'm not saying its a good idea, but its certainly a right.
Natural analog (Score:3, Insightful)
We are not called "consumers" for nothing. We devour things, use them up. But we expend effort in doing so, and wish to minimize that at every turn. We've all been there; you want cheaper gas, but are you willing to sit in line, idling your engine and getting no where, to get it? Someone obviously is willing to do that because otherwise there would not be a line, but their situation (maybe they have no money and are not in a hurry) is different from your own (you got places to be.)
How do animals do this? It is the subject of a lot of study since some of the strategies would appear to require a good deal of instinct in the guise of intelligence. And the strategies can become so critical and sensitive to minor changes in input that the strategies can finally drive speciation itself. How you forage can actually shape who you are and what you look like, and even drive you into so tight a corner that you are vulnerable to extinction (take pandas for example.)
What was interesting about this article was that the author came to much the same conclusion; pricing will drive what companies do and even how they function. Eventually, pricing strategies may create new companies that can exploit/forage across new resources or simply exploit old resources more completely. That is certainly a form of commercial speciation, with all the attendant risks and opportunities.
Commerce used to be a generalized affair, a product of human imagination and under our (inexact) control. What happens when commerce becomes like an organism in its own right, with its own strategies for survival, where we are but the engine that drives it? And for that matter, do we then become the food source for commerce in turn?
Trout eat their own offspring, which seems counter-Darwinian. The study of why they do that is fascinating and terrifying at the same time; they eat their young because the young can get at food resources under stones and in the reeds that the adults cannot. When the adult eats the fingerlings, they are efficiently foraging for grubs under stones that normally they would never reach. The young are like an extended feeding organ of the adults, and the advantage of eating them is just enough to outweigh the loss of life.
Perhaps commerce, the child of our own genius, is looking at us hungrily. We work creatively to buy things and our work nourishes what used to be our child but is now our master. Unknown to us, we are in the end serving and not being served. Unless in "being served" one means served up with fries and a regular drink.
slow company, the price is wrong. (Score:4, Insightful)
The neat curves and crisp laws of supply and demand, elasticity, and rational behavior that everyone learns in microeconomics class don't work in the real world.
That's macroeconomics and it does indeed work. That's the whole problem with this aproach. To paraphrase Alan Greenspan, "laws of supply and demand are not to be conned."
Business is at the start of a new era of pricing. This era is being shaped by a new set of insights into business strategy and human behavior, and these insights are turbocharged with software, mathematics, and rapid experimentation. The result is what might be called "scientific pricing." There is even a blossoming industry of a dozen companies that offer scientific-pricing services.
I'll bet there are a whole pile of companies willing to charge you to piss off your customers like that. "Turbocharged" indeed, that means twisted, right? Anyone who believes charging two people different prices for the same thing will make them happy, has a serious lack of insight into human behavior. People talk and feel ripped off.
Changes in pricing will alter every part of the economy. The way that business gets done will change, and companies will flourish or be crushed based in part on their ability to grasp and master the new science of pricing. Among those already using the new techniques are Best Buy, DHL, Ford Motor Co., the Home Depot, JC Penney, Safeway, Saks, Staples, UPS, and Winn-Dixie. General Electric, perhaps taking Jack Welch's warnings to heart, is not only working with at least two different pricing companies -- it has also invested in one.
Send that list to fucked company. All are known for overpricing shoddy merchanise. Soon they will be known for anti-trust violations, save GE which still makes good industial wares and might be smart enough to avoid this new scheme to bilk companies. Winn-Dixie with it's silly little black punishment card is wasting money that could better be spent elsewhere, while my wife now buys groceries at WalMart.
The oldest records of prices ever found are clay tablets with pictographic symbols found in a town known as Uruk, in what was ancient Sumer and what is now southern Iraq. These price records are from 3300 BC -- they've survived 5,300 years. The documents -- records of payment for barley and wheat, for sheep, and for beer -- are really receipts. "Uruk was a large city, at a minimum 40,000 people," says UCLA professor Robert Englund, one of the few experts on the Uruk documents. "So some of the quantities are very high -- hundreds of thousands of pounds of barley, for instance."
OK so far.
But here's the really remarkable thing. The earliest Uruk tablets aren't just the oldest pricing records ever found. They are the oldest examples of human writing yet discovered. In other words, when humans first took stylus to wet clay, the first thing that they were compelled to record was . . . prices.
Bzzzzt - they recorded your generosity to the temple and other administrative stuff. What they show is a deeply rooted human desire for equal treatment and fairness. This is exactly the oposite of using electronic records in a vain atempt to foist higher prices on, "suckers".
Re:Fleecing the poor (Score:3, Insightful)
I also lived in one of those places, getting my Masters (although it was in EE, not business or econ.) I am not arguing that the "wrong side of the tracks" is well-served, just that I don't believe that it is any longer a function of class distinctions or racism, per se. The intervention of the government in the '60s and prior is, probably, a good argument that it was not the free-market that made the decision to not lend in those areas.
I agree that, in the free-market, the poor are more harshly treated than the rich, and I can't provably explain why that is so. But, the Bonfire of the Vanities schtick is pretty weak: if you believe it, open a mortgage broker for those you believe are excluded--you can be a hero, make a lot of money, and probably get government assistance besides.
Many of these communities seem to make decisions that economists of the classical/rational school would be amazed at, however. For various reasons, both the community of Harlem and the town of Mount Vernon (both New York) have turned down proposals by big-box retailers to open in their neighborhoods, forgoing both the tax benefits and the lower prices that would result. I can't speak for why they did this, but it is one answer to the bizarre mystery of why groceries are more expensive in poor neighborhoods than anywhere else in New York City.
Re:Fleecing the poor (Score:2, Insightful)
Or in many cases don't manage what money they have very well. Don't get me wrong -- I know that the rich have some nice "perks" based on who they know and what they do. But I also know from experiences in my own family that the poor frequently make decisions that make them stay that way. I have many nice examples, but I'll only give one. One of my uncles has been out of work (with various excuses) for the last 30 years. My aunt has had to work to keep the family fed. Fortunately, they inherited land from my aunt's father and were able to put a trailer on it, otherwise I don't know where they'd live. Despite the fact that they could barely put food on the table, my uncle still managed to cough up the money for a 48" color TV and a nice Lazy Boy recliner. At the time, that TV was $500 minimum, and the recliner would have been close to that. Despite all of this, they continued to beg other members of the family for loans to "get them by."
Like I said, don't get me wrong. I also know many people who scrape to make ends meet through no fault of their own. But on close examination, it's pretty easy to tell who makes good decisions. Interestingly enough, telemarketers frequently target the elderly and poor for some of their scams because they know they are likely to be gullible.
Re:Airline Pricing..and others (Score:1, Insightful)
I'd also say that about 20% of rich people are rich because they're shrewd, and the other 80% are rich because they're priveleged.
These two lines combine into the most bigotted thing I've seen on Slashdot with positive moderation. Your reasons for poverty translate roughly into genetics and rich people. No mention of being born into poverty, an apethetic school system, abandoned single mothers, mental illness, or any of the thousands of other tragedies that propel one to destitution outside of cyberworld. Your reasons for affluence are flatly incoherent. Most busineses fail in the hands of inheritors. Being rich is being priviledged, it's a tautology. Some are born into it, others win lotteries, some through crime, but most through busting their asses seven days a week while people like you are bitching at Starbucks. You 'shrewd' comment was a backhand compliment implying dishonesty. Get over yourself.
Re:Answer to tax solution (Score:1, Insightful)