Pricing, and the decision to display it, is as important as advertising to
Fancy a teeming bazaar in an exotic mid-eastern locale, where bargaining is a way of life. Meet Samir, the progressively-minded
carpet-monger who's heard of the fabulous new strategy of some American car
dealers: bottom-line pricing clearly marked on all products and no
time-consuming, irritating haggling over price. So Samir put price
tags on all of his hand-woven wares. Samir also places over his humble tent
a sign which boasts "Finally! No-haggle pricing — what you see is the price
you'll pay and not a rupee more!" The lone progressively-minded carpet-seller
would probably meet a gruesome demise at the hands of one, if not more, of his
competitors; by dagger or perhaps public stoning! Why? Because the public;
tourists especially, would come flocking to his carpet-stand in order to enjoy
an anxiety- and hassle-free rug purchasing experience. Of course his competitors
will be pissed off, because they prey upon the uninitiated, the foreigners, and
the like. They make a fortune charging a hundred rupees for a five-rupee carpet
to people who don't know better.
"You get what you pay for." The old adage isn't always true in today's
business climate. "Buyer beware" is just as time-honored but more relevant in
The camera/audio/video places that advertise weekly in the newspaper are a
tremendous source of frustration for me. The ad will offer a digital camera which is
akin to last year's model in features and ease of use for a price that seems
ridiculously low. But when you spot the camera that was just reviewed by
Digital Doo-Dad Delights Magazine as the most versatile, accurate,
super-good-looking photographic "must-have" this year, instead of a competitive
price displayed in the ad, they'll have printed "please call," "priced so low we
can't print it," or worse, "see sales personnel in camera department for our
special price." And off one must go to do battle with the mighty camera
In my experience, when you call, you're quoted a price which is ridiculously
lower than the MSRP quoted in Digital Doo-Dad Delights. So the
next thing to do is go down to the store and pick up your bargain, right? In the
good old days a camera salesman, even in one of those enormous camera
super-buy outfits, was as enthusiastic as the customer if not more so about the
features and quality of the newest models. Amiable older men, they'd chat for
hours before making the sale. Now back to getting to the store that asked you to
call. Upon your arrival you're greeted by someone who's less than enthusiastic
about the products. In fact, if he or she has taken pictures at all, it was
probably of their soon-to-be ex-spouse exiting a motel room after a tryst. Oh,
Heavens! I do apologize to any and all of you who just read that who themselves
have caught an adulterous ex-spouse on film in flagrante delicto or
shortly thereafter. So once the salesperson's informed by you of the exact model
of camera you want and the price quoted over the phone, they let out a hearty
"ha!" and announce that the store is currently out of stock of
that model. They then show you a stripped-down, inferior model made by the same
company, or a different make of camera altogether.
Should the store actually have, ready for sale, the camera you wanted,
they'll tell you the price is $200 higher than what you were quoted on the
phone. "Let me speak to (name of person you spoke to on phone)!" you cry.
"There's no (name of person you spoke to on phone) here!" they howl. Then the
slimiest, slickest looking one in the store pulls you aside, and tells you that
if you buy an extra lens, lens caps, cleaning kit, tripod, flash, and crummy
vinyl case then you can have the camera at the quoted price. The
laundry-list of items is surely at least $400 more than you expected to spend.
The very worst is when two or more gang up on you; the second has a negative
comment on each and every extra item mentioned by the first, and therefore
recommends an even more costly alternative to the extra lens, lens caps,
cleaning kit, tripod, flash, and crummy vinyl case.
On the Verge of Tiers
Sadly, in many businesses which are hotly competitive, pricing
is secreted away until the buyer comes in contact with a sales representative.
Now, this holds particularly true in the marketing of commercial equipment and
supplies. Colorful catalogues, as well as sample merchandise, may be abundant in
the showroom. Video loops may feature handsome product spokesmen or attractive
young women demonstrating the features and benefits of a product. Signage galore
explains why "Brand A" is the only brand you should choose! However, the sales
representative holds the key to a major factor which influences the buyer's
decision whether or not to purchase from a certain business. That key is the
Let's take the businesses which supply restaurants with
everything from cutlery to coolers; two-ounce salad dressing
cups to 50-gallon gas-fired soup kettles. The modus operandi of these
places is to put a "list price" on a sticker on the item or a sign near the
item. This is the price which is paid only by some poor wet-behind-the-ears
soul who comes in and has never bought such equipment nor supplies before. They
point to the stuff they want (or gather it together in a cart), walk up to the
cash register, and are met by a smiling salesperson who says "will this be cash
or credit card?" The transaction is consummated and that's that.
Those seasoned veterans of the restaurant business, whether hot dog vendors or the gastronomical Bill Gateses know
enough to realize that there are many price tiers. Typically, the more stuff you
buy the, the more deeply-discounted the price tier you enjoy. For example's sake, let's say that
our new-to-the-business fellow, mentioned hereinabove, buys six square china
sugar-packet holders, he's gonna pay $6.95 for each one of them. (This is
not a joke; restaurant equipment is obscenely expensive. In fact, the only thing
more obscene than the price of the little china boxes is the penchant some restaurant customers have for
secreting said items in their clothing/parcels to take home to use as "nifty
paper-clip holders" or whatever.) Now, the guy whose restaurant has just been
fitted with a kitchen full of $10,000-a-piece refrigerators and a $60,000 range
hood by the same restaurant equipment wholesaler will no doubt walk up to the
same cashier with the same little sugar-packet organizers and ask the cashier
"what can you do for me on these?"
The cashier then looks at the customer's information, no doubt displayed on a
computer terminal, and is instructed to charge that customer only $2.55 apiece
for the china doo-dads. And that's the way it is, and that's the way it's gonna
What happened to price tags in grocery stores?
Of course, thanks to the laws promulgated to protect consumers,
supermarkets were, until only recently, required to affix a price tag to
each and every package, can, bottle, sack, bag, carton, or tub of stuff they
sell. Then came "unit pricing" disclosure regulations and bar codes.
A bar code, printed by the manufacturer on each item (often called the UPC
code) saves the store time and money because they no longer need to place a
price sticker on each and every item. A shelf-tag which contains the item name,
size of the package, and unit price is affixed to the shelf below the stack of
items upon it. Often, tiny LCD signs have replaced printed or hand-written
Now, it's nice to have a little LCD display tell you that the store-brand tomato juice is four cents per
ounce less than the name-brand. The real benefit is that to the store. By not
having a little white tag marked "$1.29" atop your can of tomato juice your eyes
then focus on the picture of the gloriously ripe tomatoes, the verdant farmland,
and the brand name printed on the can's label. Of course, if this tomato juice
comes from "tomatoes picked at the peak of goodness," and originates from said
verdant farmland, you're gonna pop one, if not two cans into your shopping cart.
Unless you're a "smart shopper" who carefully reads the unit pricing on the
shelf-tags, the idea of a price for this item is somehow subdued in your
consciousness. In fact, the store hopes that by not marking items with prices,
cost flies out of your consciousness. If the customer hasn't a bunch of
price tags before them which they can quickly tally so as to estimate the total
cost of their selections, they're more likely to engage in impulse buying.
Now, bar codes take care of all of that and more. They have, indeed, solved
the delays which can be best described with six words which used to be all too
often heard on a stores public address system: "(Department) price check on
register (number)." A
single change on a master computer somewhere in the store, and all cans of
tomato juice "scan" at a different price. In more scrupulous grocery stores,
they actually display the signs which guarantee that if the scanned price of the
item is higher than the price displayed on the shelf-tag or little LCD device,
you're entitled to yet one more can of tomato juice, at no charge,
as the store's punishment for their attempt to charge you $1.29 for a can of
tomato juice advertised for $0.89.
Ever been waiting on the check-out line when someone in front of you insists
that the box of Pepperidge Farm "Hostess Assortment" is only $1.99 when you
and I know that such deluxe morsels are going to set one back at least five
dollars, maybe more. The reason for this is that the particular box of "Hostess
Assortment" was pushed into a part of the shelf marked with a shelf-tag that
read $1.99. You and I also know that deep down in their little miserly hearts,
these individuals are well aware that a Pepperidge Farm "Hostess Assortment"
costs a lot more than two bucks. I will concede that some folks are just plain
meatheads, dead from the neck up, and therefore are innocently unaware of what things really cost.
The preceding situation actually happened to me. A woman ahead of me in line
insisted that the price for a Pepperidge Farm Hostess Assortment box of cookies
was $1.19. Having bought such assortment in the past (not because I'm a hostess,
but because I can and do eat the entire box of cookies in one sitting,
occasionally with a half a pint of ice cream.) After waiting five minutes and
not having an alternative aisle I cried out to nobody in particular:
"Finish with all of this bitching RIGHT NOW!
I'll give the fucking clueless imbecile the difference! The
'Hostess Assortment' costs upwards of five fucking dollars, goddammit.
For $1.19, you get the fucking 'Homeless' assortment!
Some of the customers who witnessed this were shocked. Three of the cashiers
applauded loudly, however. The woman ran away, leaving her modest grocery order
on the check-out counter. I asked the cashier if the store manager would call
the police. She replied that similar situations happen all the time and having
police cars outside the store every time someone goes into a rage which doesn't
involve physical violence is bad for business.
stores (the first one I saw was Target) have ingeniously solved the drama of
cashier-intimidating, that's-what-it-said-on-the-shelf-arguing demons
like the one described above by installing little "price-checker" bar code readers around the
store, so one can re-assure one's self that the item clutched in your hands
costs exactly what the sign or shelf-tag says it does. Just imagine the relief
of the droves of paranoids who can now re-assure themselves that
their items will scan correctly. After that thought, another thought immediately
entered my sick mind... secondary price checking scanners placed nearby
the first ones "just to be sure..."
"If You Have To Ask..."
Normally when one goes to a store there are price tags attached to
everything. But then there's the case of the deluxe boutiques which sell to only
the cream of the financial demographic crop. There's not a price
tag to be seen. I guess it's part of the fact that etiquette dictates that one
mention the distasteful matters of things such as money as
infrequently as possible. So I guess I must just waltz into Gucci or
Harry Winston, pick out a couple of bagatelles, lay my platinum American
Express card down on the counter and shout, "Have at me! Take thee your pound
of flesh!" The problem is twofold, a) I haven't a
platinum American Express card, not even a gold one; and b) the way I look, I'll
ring the buzzer at the door of either Gucci or Cartier's Madison Avenue boutique
and nobody will answer, based on my usual disheveled appearance. (Side
note: pounds of flesh, oy, vey, I got plenty!)
This really happened to me when I was dating my wife. She's addicted to
shopping, and admits it readily. I'm addicted to booze, and admit it readily.
Ours is a match made in Heaven. She shops, I accompany her, I drink. End of
story. She thought it rather chivalrous of me to
accompany her on a shopping adventure in New York City. I took
her to Henri Bendel, the famous vendor of attire and accessories to the wealthy
and privileged. We ended up in a section of the store reserved for couture articles.
San-San saw a little dress (that in my humble opinion looked like something
Phyllis Diller would wear while vacuuming). But I realized it appealed to her.
A sales clerk appeared from nowhere and begged us to sit down. We were asked if
we'd like a hot cup of coffee or a cold glass of wine. I asked if they had any
gin. They did not. The clerk patiently explained that the item San-San was
inspecting was indeed created for that purpose alone; inspection. (No, you silly
goose, not vacuuming!) The dress was a genuine Betsy Johnson and they could have
one ready to fit San-San's exact measurements in a matter of about two weeks.
It took every fiber of my being not to do a spit take when San-San asked
if, in this department, they had any "clearance" items. The sales clerk frowned,
and recommended that there would be much more affordable attire on the lower
floors of the store. Before we left, I looked into the eyes of the beleaguered
clerk, who looked back at me with a loathing undisguised. I summoned up all of
my courage and asked, "that little blue one, with the sheer fabric and the
feathers at the bottom, what would one of those cost in a size 4?" After a
pregnant pause, the stymied woman uttered "about eighty-nine hundred dollars." I
looked at her as she looked away in disgust and I said, "Oh, well, you know what
they say, if ya gotta ask, ya probably can't..." I wondered if, following
our departure, she had San-San's
tea cup and my wine glass sterilized, or if she just threw them away outright.
Price = Prestige
A famous-name German coffee maker; at Bloomingdale's housewares section,
$215. At Bed, Bath and Beyond (mind you, the very same model number), $169.99.
Same damned machine; no difference at all. Does one pay (the difference of $45.01) for the privilege of taking one's treasure(s) home in a
Bloomingdales' bag? Is the air healthier in Bloomingdales? Both stores have the same return policy. What's up with
that? Let me paraphrase an anecdote which further explains this phenomenon:
There is a popular story told in marketing circles about a woman who owned a
boutique in the southwest that did a brisk business in various leather goods,
Native American crafts, handmade pottery and the like. However, her little glass
display of turquoise and silver jewelry seemed to be totally ignored by her
customers. Before going on a vacation, the store-owner dragged a rather tall
table towards the jewelry case, and told her assistant "put that jewelry a
little higher, maybe we'll move it that way." The woman then left for two weeks.
By the time the store-owner returned, about three-quarters of the jewelry had
been sold, as if by some miracle. This was the same jewelry that'd languished in
the case for over a year. Atop the tall table was a vase filled with dried
flowers, which the assistant had helpfully put together, thinking that her boss
didn't know what to do with the table. The assistant had misunderstood and had
carefully removed the tags from all of the jewelry and replaced them with tags
which displayed prices nearly twice as high.
The moral of the story is that by attaching a far too inexpensive price to
something, the customer perceives the product as being cheap itself (Heaven
forbid it comes to mind that perhaps the store-monger has a conscience and
therefore limits mark-up to something fair, rather than obscene).
Now, one who shops at Wal-Mart is completely aware that they're certainly
going to find items priced well below that of their competitors. But what
costs more, a coffee pot that's priced at $19.95 which stops working after
about a month and a half, or the reliable German one which sells for eight times
as much yet lasts for at least 23 times as long and, in fact, saves you precious
time by brewing coffee four times as fast as the $20 piece of garbage that was
assembled in Namibia by enslaved Indonesian workers?
Pricing and Customers: Anecdotal Observations of the Customer's Decision
Based On Price
There is no better example of the "price equals prestige" phenomena than when
uneducated buyers purchase wine in restaurants. Whether to impress his or her
guests, or merely genuinely striving to get them the best, the host will point
to the highest-priced bottle of Bordeaux on my menu and insist that a bottle of
it be procured at once. I've actually been told to "shut up" when I suggest that
perhaps a very dark, oaky, unapproachable wine will not match their food and
that they'd be happier with a bottle that's perhaps half the cost. Oh, no. These
lovers of the finer things in life smile broadly when I deliver the bottle. Then
the fun begins.
There was the customer who castigated me for not pouring wine for his significant other
first, after I'd poured him an ounce and asked that he check the bottle. Had he
not been so mean, I'd not have procured my photocopy of "ordering wine in a
restaurant," a handy checklist emailed to me by the people at the Zagat
restaurant guide. Right there in print it said, "the sommelier will always pour
a small bit of the wine into a glass for the host or the person at the table
(indicated by the host or mutually agreed upon) with the best knowledge of wine
in order to check that the wine's not gone bad due to oxidation or poor storage
temperatures..." "I beg your forgiveness, sir," I said, "if you thought my
action to be sexist or otherwise offensive. Here's the procedure for wine
service I adhere to because it's customary and practical, lest the lady
potentially be exposed to wine that's gone bad."
There was the host who ordered a very heavy red Zinfandel costing about $85
to take with a meal of sushi. Her dining companions made peculiar faces as the
Zin's body, oak and pepper comingled with the tastes of ginger and wasabi.
If anyone recalls the brilliant haunted dinner-party scene in Tim
Beetlejuice with the poltergeist-possessed guests helplessly flailing
about while Harry Belafonte sings "Daylight Come an' Me Wanna Go Home,"
a similar scene is what was probably going on in the mouths of
these people, and perhaps in their minds as well.
Finally there's the host who goes out on a limb and tries something different
for a change. There's gotta be a reason why serious wine drinkers pay so much
for the stuff, right? Well, after selecting a very, very dry Medoc priced
waaaay on the high end of the list, he sends it back because "the bottle's bad.
It's just no good. I think it's turned to vinegar*!" Our policy is one of the
customer always being right. When probed to find a suitable replacement, it
comes out in the conversation that the wine of choice at home is one of the
cheapest, sweetest "bag-in-box" brands on the market. The customer demands
something "better" than the sweeter but much less expensive bottle that'd been
sent back (not because it was bad; but because he had no tolerance at all for
the natural tannins in a dry red wine). Aha! It came to me that I'd been given a
free bottle of inexpensive, off-dry "barbecue" wine by a wholesaler;
the wine was a blend of reds, heavy on Grenache for summer
drinking. I told the gentleman that it was part of my own collection and I'd
only part with it for the princely sum of $60. They loved it. I wonder if they
saw it on display in the local wine store for $4.49?
*Wine doesn't turn to vinegar on its own; one need add the proper
"friendly" bacteria to make wine into vinegar. A bad bottle of wine merely
contains the toxins released from the chemical reaction of the interaction
with the wine and oxygen.
If one SEARCHes E2 for "price" and checks the "ignore exact" box, over one
hundred node titles appear. Apparently price is a popular subject; whether it be
monetary or intangible. The writing of this enormous, non-scientific essay began
when I saw the nodeshell title and thought of the dozens of times I'd pondered
the issue of pricing in business. Now, someday, I'll write a well-researched
factual node citing twenty or so important articles written by marketing
experts, economists and the like which address various pricing strategies as
they apply to different products and markets. I am certain that some E2 noders,
spotting the lack of citations/sources, are furious at me, because I have in the
past messaged them that their "writeup lacks merit absent proof to support their
arguments." Well, there's a reason, and it's a personal peeve that I needed to
get off of my chest.
Would that I had a dollar for every time a customer has told me "Why, your
Shrimp with Garlic Sauce is so incredibly good!, we'll never go back to [insert
name of competing restaurant here]!" The fact is, that most of my competition
charges about $25 for eight or so jumbo shrimp in Garlic Sauce, mixed with
vegetables and more often than not garnished with a flower carved out of a beet,
radish or some other root vegetable. I charge $14.95 for an even dozen shrimp,
the same size as the competition uses. And heck, they get the flower carved out
of a vegetable at my place, too! These customers had no idea that good food
could actually be had at a value price. Well, the good news is that they'll now
spread the word about the fabulous food at my place. But how many
customers continue to rely on price alone as an arbiter of whether something's
"good" or not? How many potential customers will never set foot in my place of
business because they assume that if I'm charging a value price they'll get an
So, I invite you, my friends, to venture forth with these stories and
opinions in mind and buy stuff. However, I have no answer to the questions I
leave you with:
- Can I assume something's better because it costs more?
- Is the brand-name product I pay less for at a discount store just as good as
the one I purchase at a glamorous department store?
- Does one really get what one pays for?
- What is the meaning of life?
UPDATE November 8, 2007: A message I found troubling landed in my inbox this morning:
wordnerd says re Promotions Without Prices: This makes me very sad to read. When I was an editor, my chief concern was encouraging new users. Instead of encouraging them, you've written a long, rambling writeup 2 days after a week and a half old user wrote a writeup that needs encouragement. I guess I'll do the encouragement for you.
I messaged the writer and made it clear that I'd not intended my writeup to poke fun at his; I merely enjoyed the title and the concept, and, having studied pricing (and marketing) extensively, was impelled to come up with a list of my own beefs about pricing. On another point, I've yet to receive any other criticism about this writeup. It'd be nice for those who agree that it's "rambling" give me a bit of critique. I know it's long, but heck, you shoulda seen the first draft!