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I think we don't talk enough about income gaps when discussing pricing for supply-constrained products. 75th percentile households have at least twice the inco

I think we don't talk enough about income gaps when discussing pricing for supply-constrained products. 75th percentile households have at least twice the income as a median household. And the 90th percentile nearly doubles in income again. 25th percentile households have half the income as a median. If you live in an average household, and you get into a bidding war with three other households, it's pretty likely that one of those households can afford to pay at least twice what you can. Bump that up to 10 households in competition, and it's likely that someone in that group can afford to pay at least four times as much as you can. This isn't even getting into the fact that household spending doesn't scale with income, so a doubling of income often results in more than a doubling in disposable income.

throwaway0a5e 5y ago
>This isn't even getting into the fact that household spending doesn't scale with income, so a doubling of income often results in more than a doubling in disposable income. It's a little more nuanced than that. The 75th and 90th percentiles are pissing away money sending their kids to expensive daycare. The median and 25th are sending their kids to the lady down the street who takes cash. The 75th and 90th care about what school district they can afford a house in. The median and 25th (if the 25th is even buying a house) know they can't afford to live in those neighborhoods so they shop elsewhere. These are just two examples but the point is that except for some very basic necessities these groups are often not competing with each other for big ticket items and the higher income demographics spend tons more on these big ticket items eating up more of their discretionary income. Of course they the high percentiles on average have more discretionary income than the low percentiles but you can't just look at the median car price and the median mortgage payment and use that to infer much of anything about the discretionary income at any given level because it varies so much by whether you're acting like everyone else at your income level or above/below on the big ticket items. Percentiles aren't very helpful here because discretionary income is generally very small compared to these big ticket items that vary a ton based on social factors.

throwaway0a5e 5y ago

>This isn't even getting into the fact that household spending doesn't scale with income, so a doubling of income often results in more than a doubling in disposable income. It's a little more nuanced than that. The 75th and 90th percentiles are pissing away money sending their kids to expensive daycare. The median and 25th are sending their kids to the lady down the street who takes cash. The 75th and 90th care about what school district they can afford a house in. The median and 25th (if the 25th is even buying a house) know they can't afford to live in those neighborhoods so they shop elsewhere. These are just two examples but the point is that except for some very basic necessities these groups are often not competing with each other for big ticket items and the higher income demographics spend tons more on these big ticket items eating up more of their discretionary income. Of course they the high percentiles on average have more discretionary income than the low percentiles but you can't just look at the median car price and the median mortgage payment and use that to infer much of anything about the discretionary income at any given level because it varies so much by whether you're acting like everyone else at your income level or above/below on the big ticket items. Percentiles aren't very helpful here because discretionary income is generally very small compared to these big ticket items that vary a ton based on social factors.