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> Ripping people off with high prices is actually very rare nowadays, mostly thanks to the big online marketplaces. This is so absolutely untrue that this rea

> Ripping people off with high prices is actually very rare nowadays, mostly thanks to the big online marketplaces. This is so absolutely untrue that this reads like a joke. > Many people assume that if they're seeing something that's more expensive than they're used to that they're being ripped off for some reason. Yes, because it's so absurdly common. "High price ripoffs" are so common that it's the default mode of operation for nearly every company in America. "High price ripoffs" are so common, that it's literally taught in school as a fundamental part of all marketing. (Price anchoring, premium pricing, skimming pricing, are all just 'high-price rip-offs' applied practically). Yes, it still occasionally happens, but the days of "a high price probably means better time/materials/quality" are long gone. 9 times out of 10, the high price product is identical to the cheap price one, and the higher price is explicitly just a ripoff.

jakubp 6y ago
I'll give a practical example. If you got to a gas station near me, you can get a CR2032 battery for say 2 USD. If you got to a certain home decor/equipment store a mile away, you'll get 4 of these batteries for 1 USD. That's what, 8x more expensive for a relatively common product? Gas stations and convenience stores in my country routinely charge 500-1000% more for common products because, and here's the gist of it I'm sure for most store/chain owners, "why not"?
- shawnz 6y ago
  You are paying extra for the service the gas station is providing which is that they shipped and stored the batteries in a location close to your home. The gas station is probably also open longer than the big box store.
  - dharmab 6y ago
    The gas station also probably pays more per square foot of real estate.
  - jakubp 6y ago
    The store where the price is low also needs it shipped and stored, and is also close to my home. So that's definitely not a reason. Did you mean "convenience makes the price higher"? No quarrel there! The issue is how much higher. 8x more expensive (as an example) is in the "ripping me off" territory, if you ask me :)
    - dharmab 6y ago
      Real estate prices for a big box store and small convenience store are totally different. Wait until you find out the cost of producing most non-alcoholic beverages...
      - cutemonster 6y ago
        A bit more than water but not much, may I guess? Transporting and storage and the waiter/ress is the real cost?
        Daviey 6y ago
        The subsidies from high-fructose corn syrup etc, may even make the production of fizzy drinks less than water.
        dharmab 6y ago
        Fountain drinks are produced on-site using tap water and concentrated syrup. Transport and shipping cost is low since the syrup doesn't take up much space. A typical fast food soda (any size) costs about 15-20 cents for the cup and soda, and is sold for $1 on the low end. Larger chains can optimize the price down to 5-10 cents on the most popular sodas. Labor costs are insignificant if the customer self-serves from the fountain.
        cutemonster 6y ago
        Ok, thanks. I previously assume the drinks were in coke cans, but now when you mention cups instead, and self serving, it's more obvious to me how the drinks can be that inexpensive.
  - mbreese 6y ago
    It’s even in the name. You’re paying for ... convenience. That’s why things are more expensive per unit. A) they are closer to where you live. And B) in smaller unit packs. Maybe you only need one battery, but to get them cheaper (per unit) you need to buy an 8-pack. If a one pack is $2, but an 8-pack is $0.50/ per battery. If you only need one, you’re still better off paying four times as much ($2 < $4). It’s all about the convenience...
tinco 6y ago
Maybe you're a little bit more of a sceptic than I am. Strategies like price anchoring, premium pricing and other kinds of artificial product segmentation are ways to derive maximum value from a wider range of customers. I don't consider them a way to rip off people. If you've got a monopoly, sure this can lead to price gauging. But in a competitive market it just means you are rewarded for your edge. Anyway, I've only felt like I was ripped off on price a couple times. And every time it was buying something in a higher end brick & mortar store where I bought a quality item at significant mark up. Brick and mortar stores simply are something that's a luxury that is hard to justify if you're on a shoestring budget.
- stonemetal12 6y ago
  " Derive maximum value" is the technical term for ripping people off. Nothing said about delivering value, just how much "value" can I suck out before they walk away from the table.
  - shawnz 6y ago
    As opposed to purposely underpaying compared to the fair value and therefore ripping businesses off? Or is that fine because a business can't starve (even though its owners might?)

jakubp 6y ago

I'll give a practical example. If you got to a gas station near me, you can get a CR2032 battery for say 2 USD. If you got to a certain home decor/equipment store a mile away, you'll get 4 of these batteries for 1 USD. That's what, 8x more expensive for a relatively common product? Gas stations and convenience stores in my country routinely charge 500-1000% more for common products because, and here's the gist of it I'm sure for most store/chain owners, "why not"?

shawnz 6y ago
You are paying extra for the service the gas station is providing which is that they shipped and stored the batteries in a location close to your home. The gas station is probably also open longer than the big box store.
- dharmab 6y ago
  The gas station also probably pays more per square foot of real estate.
- jakubp 6y ago
  The store where the price is low also needs it shipped and stored, and is also close to my home. So that's definitely not a reason. Did you mean "convenience makes the price higher"? No quarrel there! The issue is how much higher. 8x more expensive (as an example) is in the "ripping me off" territory, if you ask me :)
  - dharmab 6y ago
    Real estate prices for a big box store and small convenience store are totally different. Wait until you find out the cost of producing most non-alcoholic beverages...
    - cutemonster 6y ago
      A bit more than water but not much, may I guess? Transporting and storage and the waiter/ress is the real cost?
      - Daviey 6y ago
        The subsidies from high-fructose corn syrup etc, may even make the production of fizzy drinks less than water.
      - dharmab 6y ago
        Fountain drinks are produced on-site using tap water and concentrated syrup. Transport and shipping cost is low since the syrup doesn't take up much space. A typical fast food soda (any size) costs about 15-20 cents for the cup and soda, and is sold for $1 on the low end. Larger chains can optimize the price down to 5-10 cents on the most popular sodas. Labor costs are insignificant if the customer self-serves from the fountain.
        cutemonster 6y ago
        Ok, thanks. I previously assume the drinks were in coke cans, but now when you mention cups instead, and self serving, it's more obvious to me how the drinks can be that inexpensive.
- mbreese 6y ago
  It’s even in the name. You’re paying for ... convenience. That’s why things are more expensive per unit. A) they are closer to where you live. And B) in smaller unit packs. Maybe you only need one battery, but to get them cheaper (per unit) you need to buy an 8-pack. If a one pack is $2, but an 8-pack is $0.50/ per battery. If you only need one, you’re still better off paying four times as much ($2 < $4). It’s all about the convenience...

tinco 6y ago

Maybe you're a little bit more of a sceptic than I am. Strategies like price anchoring, premium pricing and other kinds of artificial product segmentation are ways to derive maximum value from a wider range of customers. I don't consider them a way to rip off people. If you've got a monopoly, sure this can lead to price gauging. But in a competitive market it just means you are rewarded for your edge. Anyway, I've only felt like I was ripped off on price a couple times. And every time it was buying something in a higher end brick & mortar store where I bought a quality item at significant mark up. Brick and mortar stores simply are something that's a luxury that is hard to justify if you're on a shoestring budget.

stonemetal12 6y ago
" Derive maximum value" is the technical term for ripping people off. Nothing said about delivering value, just how much "value" can I suck out before they walk away from the table.
- shawnz 6y ago
  As opposed to purposely underpaying compared to the fair value and therefore ripping businesses off? Or is that fine because a business can't starve (even though its owners might?)