8 ms·

I've long been thinking about this topic. I sometimes call it the "Grief economy" -- The entity which can suffer the most grief "wins" . For example, calling C

I've long been thinking about this topic. I sometimes call it the "Grief economy" -- The entity which can suffer the most grief "wins" . For example, calling Comcast to cancel. The company is paying pennies per hour to have you on hold. But its costing you your real time. Therefore comcast can easily suffer more in the process and ultimately could just wait you out... Another example is the idea that some people get a better price because they jumped through arbitrary and non-cost affecting hoops. Things like coupon codes or buying on an arbitrary sale day. The best customer is one that comes in and says "I want this item, I will pay a reasonable price right now and walk out a happy customer"... Instead we give the best price to those who waste sales people's time with negotiations and give the worst prices to those who dont first put in a bunch of work extract the information about the right price. We are increasing the total cost of our products by making the purchase filled with uncertainty (am I getting a good price?) and external costs (I searched 2 hours for a $5 coupon) . I would propose this. If you're going to give a customer $5 off then give them all $5 off. If you cant give them all $5 off, then give none (maybe give them all $1 off?).

jdsully 7y ago
> The best customer is one that comes in and says "I want this item, I will pay a reasonable price right now and walk out a happy customer" These customers are not price sensitive. So you do not want to give them the best deal. Instead the profit maximizing technique is to find customer who won’t pay your “reasonable price” but will pay some smaller amount. You make them jump through hoops so you don’t cannibalize your “reasonable customer” sales. When done right every customer is paying what they consider “reasonable”. For some that is more money than others.
- maerF0x0 7y ago
  But why waste everyone's time with all that noise? The scarcity of the coupon diminishes the discount and wastes real people's lives on triviality. I'd rather maximize profit by delivering more to my customers, not by extracting more for the same.
  - scott_s 7y ago
    Coupons are typically for low-margin goods, such as groceries. There's not much "more" to deliver. And companies do it because they tend to get more profit than if they didn't do it.
    - maerF0x0 7y ago
      There's tons more to deliver and companies are innovating in the space. For example those prepared dinners you still cook fresh, impossibly meatless meat, delivery instead of shop yourself, direct farm to consumer (powered by ecommerce)
      - scott_s 7y ago
        That's a different product than a can of corn, which you can sometimes find a coupon for.
        Marsymars 7y ago
        Though I've never seen a coupon for say, a fresh head of broccoli.
      - vkou 7y ago
        Which are all luxury upsells on life-ncessary goods, that the 90% of the population can't, or doesn't want to waste money on. Coupons and similar time-wasters optimize the revenue that you get from that 90%.
  - lmm 7y ago
    What do you do once you're a mature, commoditized company with no room left to innovate? Maybe you wouldn't try to milk your customers for as much as they're worth, but you'll eventually retire sell your company to the highest bidder, who probably will.
    - danShumway 7y ago
      This is exactly why consumers need ways to subvert and compete with markets beyond just making individual purchasing decisions. Without a continual pressure in the opposite direction, markets will eventually optimize to be the most exploitative version of themselves that they can be. When people look at capitalism as a competitive system between multiple businesses, they're looking at an incomplete, broken system. Capitalism should be seen as a competitive system between (at least) businesses and consumers. Open Source is one way that consumers are able to place competitive pressure on the software industry without starting their own businesses. Open Source products are available for free, often developed at a loss, and they subvert the expectation that software features have to be profitable to exist. Businesses are forced to compete with free, which forces them to implement consumer-friendly features that wouldn't otherwise be profitable. Adblocking is another important force dictating online content rules -- it allows customers to directly reject a business model, by subverting the idea that profitable content can be forcibly bundled with unprofitable content. Then you have more grey-market pressures like piracy, which forces companies to compete on delivery mechanisms and not just on content. This kind of subversion helps commoditize content, making it difficult for industries to monetize products that they'd otherwise tightly control. Industries describe this as a bad thing -- if a business model isn't profitable and if creators aren't making money, then something's wrong. But this is consumers doing what they're supposed to do. It is good for consumers to compete by circumventing business models. In this case, what we'd like to see is consumers colluding to share coupons and deals, so everyone can get the best price. We want to force sellers to negotiate with consumers as a single group, not with each individual person. To a certain extent, we are seeing this, which is why you see certain businesses getting more aggressive about hiding their charges and making coupons harder to share.
- hdfbdtbcdg 7y ago
  Except that some like me will just not bother buying from you at all.
  - jdsully 7y ago
    If done right you won’t even know its happening. The best companies setup entirely different brands to segment the market.
- rebuilder 7y ago
  Maybe. I just spent a month trying to buy (not all of that time, obviously) two articles of clothing. I had fairly specific criteria ( black, hoodie + joggers, zipper on hoodie, thick and soft material on both), which most stores could not fulfil. It was strange. Major sportswear brands make the items I want. I have the money. I'm willing to pay, frankly, much more than the product is worth for most people. But the issue seems to be, somehow, retailers do not stock enough of the kinds of things I want that I could actually buy them. IOW, the maths of supply and demand seems to be a bit more complicated than one might expect.
cj 7y ago
Another way to think about it is offering sales, coupons, etc allow a retailer to offer a lower price floor for their goods, which expands the market for the retailer. In other words... Person A: Price sensitive shopper who won't pay more than $2.00 for an Avocado under any circumstance. Person B: Convenience sensitive shopper who will pay up to $4 for an Avocado. The grocery store can price using one of two methods... 1) offering the same price to all shoppers, or 2) offering a higher price to most shoppers so that they can offer a lower price to price sensitive shoppers (via coupons, arbitrary sale dates, etc). With method #1, the grocery store can only sell Avocados to Person B because their prices are permanently higher than Person A is willing to pay. But with method #2, the grocery store can sell to both people because they've created a situation where a less price sensitive person subsidizes the cost of the product purchased by another more price sensitive person. The grocery store makes more money with method #2 in this example (at least hypothetically). I think the key is realizing that people value things differently. Some people don't look at prices when they shop. Some do. Some people only shop when they think they're saving money, some don't care. Some people value convenience + time more than price, some are the reverse. Obviously this example doesn't really apply to the first part of your comment about "Grief economy", just the 2nd part about coupons + pricing.
- paulmd 7y ago
  This concept is called 'price discrimination'. The idea is that it is most efficient for a store to charge every customer the exact amount they are willing to pay before they would decide not to buy.
  - fjp 7y ago
    Complex and systematic price discrimination is probably most easily seen in the models used to price airline tickets, which involves interesting decisions like how many seats to initially reserve for business class, then how long you wait to open them up with non-business class pricing (upgrade your seat now for only $75!).
    - appleiigs 7y ago
noonespecial 7y ago
I once sold a car to a man for $500 more than my initial asking price because he made me mad with ridiculous haggling. I thought it would make him just go away. He produced the money instantly. I've always wondered about that...
- WhompingWindows 7y ago
  Yeah, that is a puzzler. According to Adam Grant, those who are intelligent negotiators don't necessarily get better short-term results for themselves, but their business partners do better, maybe because smart negotiators value the win-win for the long-term relationship. How this other guy was so bad that it made him look smart? Wow, head scratcher. Maybe he thought "Now HERE is a good negotiator, after all my BS he raises the price". Haha.
- vegetablepotpie 7y ago
  If you just raised the price and did not tell him why, he may have thought it was a consequence of you having a stronger negotiating position, like there was another buyer, his negotiating time was limited and he should make the payment while he still had control.
- scott_s 7y ago
  He needed the car, and was worried you'd go higher!
- auggierose 7y ago
  An explanation would be that your asking price was ridiculously underpriced. The man saw that and thought you are obviously clueless, maybe he can make you go even lower. After you raised the price he abandoned that strategy and just bought it.
  - habnds 7y ago
    the few times I've sold things on craigslist or whatever (I'm usually a buyer) as soon as the person has accepted my offer I'm instantly concerned that I way underpriced it and want to reneg lol.
LiquidSky 7y ago
>I sometimes call it the "Grief economy" -- The entity which can suffer the most grief "wins" . This is sadly true of human relationships as well. I've seen it phrased as "the person who cares the least in a relationship has the most power". If you are madly in love with your partner but they are slightly cooler on you, they are in a stronger position because they are more willing to risk or even break the relationship to get what they want. If you're a very clean person but your roommate is a slob, you're screwed because they're just fine with a level of mess that will quickly drive you nuts.
- maerF0x0 7y ago
  > a stronger position because they are more willing to risk or even break the relationship to get what they want IMO the treatment of such power speaks volumes of a persons character and would either attract or disgust me ...
  - cj 7y ago
    I think the implication is that this happens subconsciously, not on purpose.
mcv 7y ago
> "For example, calling Comcast to cancel. The company is paying pennies per hour to have you on hold. But its costing you your real time. Therefore comcast can easily suffer more in the process and ultimately could just wait you out..." That's why you call them while you've got something else to do. Put them on speaker while playing a computer game, doing the laundry, or whatever else you'd prefer to be doing, as long as it's something that's easy to pause as soon as they pick up the phone. Or better yet: do business with the company with the most responsive customer service.
- Jolter 7y ago
  It's seemingly not the case that Comcast has competitors in any given area of the U.S.
ulber 7y ago
This seems like a great way to think about this. The core reason why these kinds of patters keep popping up is that making people jump through hoops to get discounts is an effective way to price discriminate based on how much people value their time, and how much you value your time is going to have a very strong correlation with how much you're possibly willing to pay. I think the fixes for this are largely going to be cultural. For example something that could help is everyone having more pride and simply refusing to jump through pointless hoops for a discount (even if it is technically worth their time).
- cwkoss 7y ago
  Would be interesting to have a web shop with a repeatable "Solve this captcha for an X% chance of decreasing your price by $0.YY", where it doesn't let you go past a price floor and X and Y decreases as price approaches floor. Discount expires in an hour or few. Ideally, you'd use a functional captcha, but even without, it seems it would be as useful to society as most current price discrimination techniques. I'd imagine people would be much more likely to make a purchase if they have already invested 20 minutes solving captchas to save a few bucks.
  - maerF0x0 7y ago
    Some sites have a "spin to get a discount" feature. I would imagine you can just enter new email addresses until you get the max discount.
mavelikara 7y ago
Joel Spolsky had written few years ago about why companies do this: https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-duckies/ https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-...
ksaj 7y ago
In manipulation, there is a technique where if you want favour from someone, beat them to it by giving them something in advance. This is a psychological ploy, and it doesn't even have to be all that meaningful of an item. At trade shows, it could be yet another novelty pen, an uninflated balloon with an outdated industry joke printed on it, a sticker you'll never stick, or whatever -- something they gave you, and that you will carry around. They don't give out t-shirts or cheap raffle tickets for neon pink Teslas just because they suspect you need one. They're triggering your brain into wanting to give them something in return - your time, your money, your resources. Well, inevitably it's always to eventually sell you whatever their product is, to avoid returns, and get/keep you on board. A coupon is only one step outward from there. With a coupon, you actively "clip" it or whatever, keep it aside, carry it to the store and then cash it in. Basically a coupon is lame schwag with a hint of psychological manipulation. If they simply docked the price by 15 cents, nobody would care and the item would probably only sell at normal volume. But on coupons, your brain has been actively trying to pay them back for the honour of having that coupon. Notice, the store honours or redeems them, but only if you hurry and do it before the deadline. You always feel like you're holding up the line and inconveniencing everyone all around for the honour of using them, yet they happily abide you. Because that was the intent all along. Yes, I'm a couch psychologist. But on this, I don't think I'm very far off the mark.
coldtea 7y ago
>I've long been thinking about this topic. I sometimes call it the "Grief economy" -- The entity which can suffer the most grief "wins" . For example, calling Comcast to cancel. The company is paying pennies per hour to have you on hold. But its costing you your real time. Therefore comcast can easily suffer more in the process and ultimately could just wait you out... Nothing that a law that every businesses should have a one click cancel process you can easily and immediately use when you want to, can't fix...

jdsully 7y ago

> The best customer is one that comes in and says "I want this item, I will pay a reasonable price right now and walk out a happy customer" These customers are not price sensitive. So you do not want to give them the best deal. Instead the profit maximizing technique is to find customer who won’t pay your “reasonable price” but will pay some smaller amount. You make them jump through hoops so you don’t cannibalize your “reasonable customer” sales. When done right every customer is paying what they consider “reasonable”. For some that is more money than others.

maerF0x0 7y ago
But why waste everyone's time with all that noise? The scarcity of the coupon diminishes the discount and wastes real people's lives on triviality. I'd rather maximize profit by delivering more to my customers, not by extracting more for the same.
- scott_s 7y ago
  Coupons are typically for low-margin goods, such as groceries. There's not much "more" to deliver. And companies do it because they tend to get more profit than if they didn't do it.
  - maerF0x0 7y ago
    There's tons more to deliver and companies are innovating in the space. For example those prepared dinners you still cook fresh, impossibly meatless meat, delivery instead of shop yourself, direct farm to consumer (powered by ecommerce)
    - scott_s 7y ago
      That's a different product than a can of corn, which you can sometimes find a coupon for.
      - Marsymars 7y ago
        Though I've never seen a coupon for say, a fresh head of broccoli.
    - vkou 7y ago
      Which are all luxury upsells on life-ncessary goods, that the 90% of the population can't, or doesn't want to waste money on. Coupons and similar time-wasters optimize the revenue that you get from that 90%.
- lmm 7y ago
  What do you do once you're a mature, commoditized company with no room left to innovate? Maybe you wouldn't try to milk your customers for as much as they're worth, but you'll eventually retire sell your company to the highest bidder, who probably will.
  - danShumway 7y ago
    This is exactly why consumers need ways to subvert and compete with markets beyond just making individual purchasing decisions. Without a continual pressure in the opposite direction, markets will eventually optimize to be the most exploitative version of themselves that they can be. When people look at capitalism as a competitive system between multiple businesses, they're looking at an incomplete, broken system. Capitalism should be seen as a competitive system between (at least) businesses and consumers. Open Source is one way that consumers are able to place competitive pressure on the software industry without starting their own businesses. Open Source products are available for free, often developed at a loss, and they subvert the expectation that software features have to be profitable to exist. Businesses are forced to compete with free, which forces them to implement consumer-friendly features that wouldn't otherwise be profitable. Adblocking is another important force dictating online content rules -- it allows customers to directly reject a business model, by subverting the idea that profitable content can be forcibly bundled with unprofitable content. Then you have more grey-market pressures like piracy, which forces companies to compete on delivery mechanisms and not just on content. This kind of subversion helps commoditize content, making it difficult for industries to monetize products that they'd otherwise tightly control. Industries describe this as a bad thing -- if a business model isn't profitable and if creators aren't making money, then something's wrong. But this is consumers doing what they're supposed to do. It is good for consumers to compete by circumventing business models. In this case, what we'd like to see is consumers colluding to share coupons and deals, so everyone can get the best price. We want to force sellers to negotiate with consumers as a single group, not with each individual person. To a certain extent, we are seeing this, which is why you see certain businesses getting more aggressive about hiding their charges and making coupons harder to share.
hdfbdtbcdg 7y ago
Except that some like me will just not bother buying from you at all.
- jdsully 7y ago
  If done right you won’t even know its happening. The best companies setup entirely different brands to segment the market.
rebuilder 7y ago
Maybe. I just spent a month trying to buy (not all of that time, obviously) two articles of clothing. I had fairly specific criteria ( black, hoodie + joggers, zipper on hoodie, thick and soft material on both), which most stores could not fulfil. It was strange. Major sportswear brands make the items I want. I have the money. I'm willing to pay, frankly, much more than the product is worth for most people. But the issue seems to be, somehow, retailers do not stock enough of the kinds of things I want that I could actually buy them. IOW, the maths of supply and demand seems to be a bit more complicated than one might expect.

cj 7y ago

Another way to think about it is offering sales, coupons, etc allow a retailer to offer a lower price floor for their goods, which expands the market for the retailer. In other words... Person A: Price sensitive shopper who won't pay more than $2.00 for an Avocado under any circumstance. Person B: Convenience sensitive shopper who will pay up to $4 for an Avocado. The grocery store can price using one of two methods... 1) offering the same price to all shoppers, or 2) offering a higher price to most shoppers so that they can offer a lower price to price sensitive shoppers (via coupons, arbitrary sale dates, etc). With method #1, the grocery store can only sell Avocados to Person B because their prices are permanently higher than Person A is willing to pay. But with method #2, the grocery store can sell to both people because they've created a situation where a less price sensitive person subsidizes the cost of the product purchased by another more price sensitive person. The grocery store makes more money with method #2 in this example (at least hypothetically). I think the key is realizing that people value things differently. Some people don't look at prices when they shop. Some do. Some people only shop when they think they're saving money, some don't care. Some people value convenience + time more than price, some are the reverse. Obviously this example doesn't really apply to the first part of your comment about "Grief economy", just the 2nd part about coupons + pricing.

paulmd 7y ago
This concept is called 'price discrimination'. The idea is that it is most efficient for a store to charge every customer the exact amount they are willing to pay before they would decide not to buy.
- fjp 7y ago
  Complex and systematic price discrimination is probably most easily seen in the models used to price airline tickets, which involves interesting decisions like how many seats to initially reserve for business class, then how long you wait to open them up with non-business class pricing (upgrade your seat now for only $75!).
  - appleiigs 7y ago

noonespecial 7y ago

I once sold a car to a man for $500 more than my initial asking price because he made me mad with ridiculous haggling. I thought it would make him just go away. He produced the money instantly. I've always wondered about that...

WhompingWindows 7y ago
Yeah, that is a puzzler. According to Adam Grant, those who are intelligent negotiators don't necessarily get better short-term results for themselves, but their business partners do better, maybe because smart negotiators value the win-win for the long-term relationship. How this other guy was so bad that it made him look smart? Wow, head scratcher. Maybe he thought "Now HERE is a good negotiator, after all my BS he raises the price". Haha.
vegetablepotpie 7y ago
If you just raised the price and did not tell him why, he may have thought it was a consequence of you having a stronger negotiating position, like there was another buyer, his negotiating time was limited and he should make the payment while he still had control.
scott_s 7y ago
He needed the car, and was worried you'd go higher!
auggierose 7y ago
An explanation would be that your asking price was ridiculously underpriced. The man saw that and thought you are obviously clueless, maybe he can make you go even lower. After you raised the price he abandoned that strategy and just bought it.
- habnds 7y ago
  the few times I've sold things on craigslist or whatever (I'm usually a buyer) as soon as the person has accepted my offer I'm instantly concerned that I way underpriced it and want to reneg lol.

LiquidSky 7y ago

>I sometimes call it the "Grief economy" -- The entity which can suffer the most grief "wins" . This is sadly true of human relationships as well. I've seen it phrased as "the person who cares the least in a relationship has the most power". If you are madly in love with your partner but they are slightly cooler on you, they are in a stronger position because they are more willing to risk or even break the relationship to get what they want. If you're a very clean person but your roommate is a slob, you're screwed because they're just fine with a level of mess that will quickly drive you nuts.

maerF0x0 7y ago
> a stronger position because they are more willing to risk or even break the relationship to get what they want IMO the treatment of such power speaks volumes of a persons character and would either attract or disgust me ...
- cj 7y ago
  I think the implication is that this happens subconsciously, not on purpose.

mcv 7y ago

> "For example, calling Comcast to cancel. The company is paying pennies per hour to have you on hold. But its costing you your real time. Therefore comcast can easily suffer more in the process and ultimately could just wait you out..." That's why you call them while you've got something else to do. Put them on speaker while playing a computer game, doing the laundry, or whatever else you'd prefer to be doing, as long as it's something that's easy to pause as soon as they pick up the phone. Or better yet: do business with the company with the most responsive customer service.

Jolter 7y ago
It's seemingly not the case that Comcast has competitors in any given area of the U.S.

ulber 7y ago

This seems like a great way to think about this. The core reason why these kinds of patters keep popping up is that making people jump through hoops to get discounts is an effective way to price discriminate based on how much people value their time, and how much you value your time is going to have a very strong correlation with how much you're possibly willing to pay. I think the fixes for this are largely going to be cultural. For example something that could help is everyone having more pride and simply refusing to jump through pointless hoops for a discount (even if it is technically worth their time).

cwkoss 7y ago
Would be interesting to have a web shop with a repeatable "Solve this captcha for an X% chance of decreasing your price by $0.YY", where it doesn't let you go past a price floor and X and Y decreases as price approaches floor. Discount expires in an hour or few. Ideally, you'd use a functional captcha, but even without, it seems it would be as useful to society as most current price discrimination techniques. I'd imagine people would be much more likely to make a purchase if they have already invested 20 minutes solving captchas to save a few bucks.
- maerF0x0 7y ago
  Some sites have a "spin to get a discount" feature. I would imagine you can just enter new email addresses until you get the max discount.

mavelikara 7y ago

Joel Spolsky had written few years ago about why companies do this: https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-duckies/ https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-...

ksaj 7y ago

In manipulation, there is a technique where if you want favour from someone, beat them to it by giving them something in advance. This is a psychological ploy, and it doesn't even have to be all that meaningful of an item. At trade shows, it could be yet another novelty pen, an uninflated balloon with an outdated industry joke printed on it, a sticker you'll never stick, or whatever -- something they gave you, and that you will carry around. They don't give out t-shirts or cheap raffle tickets for neon pink Teslas just because they suspect you need one. They're triggering your brain into wanting to give them something in return - your time, your money, your resources. Well, inevitably it's always to eventually sell you whatever their product is, to avoid returns, and get/keep you on board. A coupon is only one step outward from there. With a coupon, you actively "clip" it or whatever, keep it aside, carry it to the store and then cash it in. Basically a coupon is lame schwag with a hint of psychological manipulation. If they simply docked the price by 15 cents, nobody would care and the item would probably only sell at normal volume. But on coupons, your brain has been actively trying to pay them back for the honour of having that coupon. Notice, the store honours or redeems them, but only if you hurry and do it before the deadline. You always feel like you're holding up the line and inconveniencing everyone all around for the honour of using them, yet they happily abide you. Because that was the intent all along. Yes, I'm a couch psychologist. But on this, I don't think I'm very far off the mark.

coldtea 7y ago

>I've long been thinking about this topic. I sometimes call it the "Grief economy" -- The entity which can suffer the most grief "wins" . For example, calling Comcast to cancel. The company is paying pennies per hour to have you on hold. But its costing you your real time. Therefore comcast can easily suffer more in the process and ultimately could just wait you out... Nothing that a law that every businesses should have a one click cancel process you can easily and immediately use when you want to, can't fix...