4 ms·

Which, to me, falls into the "It's just a different sales pitch and marketing strategy." category. It's a marketing stunt to make it sound good & reasonable at

Which, to me, falls into the "It's just a different sales pitch and marketing strategy." category. It's a marketing stunt to make it sound good & reasonable at first glance, but the devil is in the details.

caseysoftware 11y ago
Apartment complexes do a variation of this all the time. In your first year, they give you "one month free" and then amortize it over the life of the lease. In the second year, you don't get on the one month and there's an increase, so it becomes a huge increase all at once. For example (made up numbers): Year 1: $1k/month on a 12 month lease, 1 month free amortized -> $917/month Year 2: Year 1 + 5% -> $1050/month Removing the discount and increasing the base is a double whammy. And - like in the article - the switching costs (economic and emotional) are so high that many people will go along with it.
- logfromblammo 11y ago
  Once, while living in a big city, I was paying about $625/mo for my apartment. When the lease neared expiration, they offered me a new lease at around $800/mo. I tossed that in the garbage, and moved before my last month was up, to a much worse place that was only $500/mo. (You can buy a lot of mousetraps and roach baits with an extra $125/mo.) The last week of the month, I got a call from the old landlords. They said they hadn't received a signed copy of their lease renewal. I asked why they thought I would accept such a huge increase in rent. They said they had just renovated the place before I moved in. I laughed at them, told them I'd give the keys back on the last day of my current lease, so please be prepared to return my security deposit, and hung up. I'd like to imagine that the apartment went vacant for a few months after that, and they cried into their pillows every night because of it, but that wasn't very likely. The apartment market had a pretty rapid turnover back then, so it was probably only empty a few weeks. In my view, that huge price hike was a clear GTFO/FOAD signal. But the university undergraduate education market is much less competitive than the apartment rental markets, and the cost to going to a competitor much higher, so it's no surprise that they can get away with higher and more frequent price hikes.

caseysoftware 11y ago

Apartment complexes do a variation of this all the time. In your first year, they give you "one month free" and then amortize it over the life of the lease. In the second year, you don't get on the one month and there's an increase, so it becomes a huge increase all at once. For example (made up numbers): Year 1: $1k/month on a 12 month lease, 1 month free amortized -> $917/month Year 2: Year 1 + 5% -> $1050/month Removing the discount and increasing the base is a double whammy. And - like in the article - the switching costs (economic and emotional) are so high that many people will go along with it.

logfromblammo 11y ago
Once, while living in a big city, I was paying about $625/mo for my apartment. When the lease neared expiration, they offered me a new lease at around $800/mo. I tossed that in the garbage, and moved before my last month was up, to a much worse place that was only $500/mo. (You can buy a lot of mousetraps and roach baits with an extra $125/mo.) The last week of the month, I got a call from the old landlords. They said they hadn't received a signed copy of their lease renewal. I asked why they thought I would accept such a huge increase in rent. They said they had just renovated the place before I moved in. I laughed at them, told them I'd give the keys back on the last day of my current lease, so please be prepared to return my security deposit, and hung up. I'd like to imagine that the apartment went vacant for a few months after that, and they cried into their pillows every night because of it, but that wasn't very likely. The apartment market had a pretty rapid turnover back then, so it was probably only empty a few weeks. In my view, that huge price hike was a clear GTFO/FOAD signal. But the university undergraduate education market is much less competitive than the apartment rental markets, and the cost to going to a competitor much higher, so it's no surprise that they can get away with higher and more frequent price hikes.