Wise Jas-one Kenobi writes this post about what he calls "abusive pricing" (I normally talk about abusive frequency with respect to media, but that's another story for another day)
He cites being charged $2.80 for a cup of drip coffee at a New York hotel and says the following:
My belief is that the reason people get away with this kind of pricing is because people are not willing to say something. I think that people do predatory pricing because they can get away with it--when confronted they will stop, or at least be forced to explain themselves.
I found it interesting that Jason lets Starbucks off the hook and as I wrote in my comment:
Abusive pricing I guess is a function of what the market will bear. One one hand, it is based on the forces of supply and demand, coupled with the premium afforded to brands.I'm not saying this is right, I'm just saying it is what it is.
On the other hand, you bring up something that has nothing to do with pricing whatsoever, but more about common sense. The best example being the $14 apple.
You're paying $400 for a room, but complaining about a cup of coffee...I guess it all comes down to expectations and the management thereof. There is also the notion of perceived value.
The $14 apple (you've all been there) refers to the single apple you order from room service that comes bundled with state tax, city tax, hotel tax, tax tax, monopoly tax, airport tax, tray charges (sheesh, at least let me keep the tray) and of course the 23% gratuity for the exemplary and flawless transfer of one (1) tray from them to you without stepping on a land mine, landing in a hazard or spilling a drop of the sealed water in the process.
This is one of those cases where companies need to use a bit of subjectivity and good judgement. How hard is it to deliver an apple with a smile and "no charge" for example? But if we do that for one person, we'd have to do that for everyone! SO DAMN WHAT!
Jason's post really gets you to thinking about the P of Pricing. Not only has it become a commodity in many cases, but I believe it can also be somewhat of a liability in an era of "perfect information".
- Is it ok to overcharge based on a notion that brands should command a premium?
- Do brands deserve to charge the kinds of premiums they used to or should premiums be placed equally on "product" and "experience" (I'm alluding to the artificial aura of fuzziness created by advertising)
- At what point do brands cross a line and take advantage of their customers (Apple and iPods perhaps)?
Makes you think...
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