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By that logic they should charge by request volume, not by percentage of amount. As a matter of fact, there is no logic in pricing. Sellers will charge what the

By that logic they should charge by request volume, not by percentage of amount. As a matter of fact, there is no logic in pricing. Sellers will charge what they can get away with, buyers will pay what they can afford. And of course, it is always negotiable.

klodolph 4y ago
That assumes that the cost is proportional to the number of transactions, and is completely uncorrelated to the size of the transaction, which doesn’t make any sense to me. Any costs due to risk will be larger for larger transactions.
- potamic 4y ago
  Risk is almost always borne by the merchant or the bank, never the processor.
  - crazygringo 4y ago
    But only a small portion of the interchange fee goes to the credit card processor. Most of it goes to the bank. How else do you think credit cards are able to do things like pay 2% rewards? So the argument still holds. Banks hold more risk on larger transactions.
falcolas 4y ago
> And of course, it is always negotiable. Sweet. How do I negotiate with Amazon again? In reality, negotiation is a relic of a long gone era and flea markets. Buyer agency in general has mostly disappeared in modern transactions.
- MereInterest 4y ago
  In principle, repeated choice of whether or not to use a specific product is a form of negotiation, where each choice provides information to the seller, who can then update their pricing accordingly. In practice, this is an extremely weak signal, is swamped out by market changes, assumes zero cost of switching, ignores network effects, etc. One of many reasons why I distrust economist’s assertion of fairness.
- incone123 4y ago
  "negotiation is a relic of a long gone era and flea markets" So how did you determine salary last time you were hired? (I last negotiated a price in a retail store about 10 years ago - if you call that a long gone era then I feel rather old).
  - falcolas 4y ago
    They throw out a number based off my last salary, and said it was non-negotiable. Because I needed a job, I had no option of backing out. The time before that, I tried negotiating, and the hiring director basically said "I know what you made at your last place, so you'll get that." Even vacation has been non-negotiable. It's disheartening, but typical for tech (and ironically largely enabled by tech).
- scarface74 4y ago
  > How do I negotiate with Amazon again? As a seller? You set up your own website and don’t use Amazon. There are literally thousands of mom and pop sellers that use Shopify and advertise on Facebook and Instagram
- jsonne 4y ago
  This isn't true in payments. There are many reseller orgs, indie processors, etc. that are happy to negotiate heavily based on volume etc. Source: I was director of digital marketing for a payments company a few years ago.
  - falcolas 4y ago
    That sounds like the usual "big businesses get extra considerations that small businesses do not". And since small businesses are the vast majority in number, negotiation is absolutely not something they can rely upon. Or, to put another way, someone selling handmade goods at a fair using Square will never have more negotiation power than "if you don't like it, leave".
    - jsonne 4y ago
      You negotiate by not using square and using an alternative system in that scenario. There are price competitive options even for small businesses. The UI might be clunkier and the equipment more dated but that is the tradeoff.
      - falcolas 4y ago
        I believe a sibling comment said it best: > In practice, [switching vendors] is an extremely weak signal, is swamped out by market changes, assumes zero cost of switching, ignores network effects, etc. One of many reasons why I distrust economist’s assertion of fairness. https://news.ycombinator.com/item?id=34999021 https://news.ycombinator.com/item?id=34999021 I'd also pedantically point out that this isn't really a negotiation tactic - negotiation generally involves communication. "to confer with another so as to arrive at the settlement of some matter"
        lmm 4y ago
        If you send a message and that message is understood, that's communication. There are many ways to communicate "your price was too high".
- rocqua 4y ago
  You send them a formal letter to their listed place of business. You very likely will find amazon is not willing to engage in much negotiation, unless you happen to have a unique offer. But nothing requires amazon to engage.
crazygringo 4y ago
Well they actually do both, they charge by volume and percentage. There is absolutely logic in pricing in terms of setting a pricing floor, which often comes from a combination of fixed and variable costs. Of course you are right that there is flexibility above that, but again there's absolutely logic there as well in terms of price discrimination mechanisms. None of this is just arbitrary. These companies put a lot of thought, and logic, into their pricing mechanisms. Get it exactly right and you make a lot of money, get it a little bit wrong and you go out of business.

klodolph 4y ago

That assumes that the cost is proportional to the number of transactions, and is completely uncorrelated to the size of the transaction, which doesn’t make any sense to me. Any costs due to risk will be larger for larger transactions.

potamic 4y ago
Risk is almost always borne by the merchant or the bank, never the processor.
- crazygringo 4y ago
  But only a small portion of the interchange fee goes to the credit card processor. Most of it goes to the bank. How else do you think credit cards are able to do things like pay 2% rewards? So the argument still holds. Banks hold more risk on larger transactions.

falcolas 4y ago

> And of course, it is always negotiable. Sweet. How do I negotiate with Amazon again? In reality, negotiation is a relic of a long gone era and flea markets. Buyer agency in general has mostly disappeared in modern transactions.

MereInterest 4y ago
In principle, repeated choice of whether or not to use a specific product is a form of negotiation, where each choice provides information to the seller, who can then update their pricing accordingly. In practice, this is an extremely weak signal, is swamped out by market changes, assumes zero cost of switching, ignores network effects, etc. One of many reasons why I distrust economist’s assertion of fairness.
incone123 4y ago
"negotiation is a relic of a long gone era and flea markets" So how did you determine salary last time you were hired? (I last negotiated a price in a retail store about 10 years ago - if you call that a long gone era then I feel rather old).
- falcolas 4y ago
  They throw out a number based off my last salary, and said it was non-negotiable. Because I needed a job, I had no option of backing out. The time before that, I tried negotiating, and the hiring director basically said "I know what you made at your last place, so you'll get that." Even vacation has been non-negotiable. It's disheartening, but typical for tech (and ironically largely enabled by tech).
scarface74 4y ago
> How do I negotiate with Amazon again? As a seller? You set up your own website and don’t use Amazon. There are literally thousands of mom and pop sellers that use Shopify and advertise on Facebook and Instagram
jsonne 4y ago
This isn't true in payments. There are many reseller orgs, indie processors, etc. that are happy to negotiate heavily based on volume etc. Source: I was director of digital marketing for a payments company a few years ago.
- falcolas 4y ago
  That sounds like the usual "big businesses get extra considerations that small businesses do not". And since small businesses are the vast majority in number, negotiation is absolutely not something they can rely upon. Or, to put another way, someone selling handmade goods at a fair using Square will never have more negotiation power than "if you don't like it, leave".
  - jsonne 4y ago
    You negotiate by not using square and using an alternative system in that scenario. There are price competitive options even for small businesses. The UI might be clunkier and the equipment more dated but that is the tradeoff.
    - falcolas 4y ago
      I believe a sibling comment said it best: > In practice, [switching vendors] is an extremely weak signal, is swamped out by market changes, assumes zero cost of switching, ignores network effects, etc. One of many reasons why I distrust economist’s assertion of fairness. https://news.ycombinator.com/item?id=34999021 https://news.ycombinator.com/item?id=34999021 I'd also pedantically point out that this isn't really a negotiation tactic - negotiation generally involves communication. "to confer with another so as to arrive at the settlement of some matter"
      - lmm 4y ago
        If you send a message and that message is understood, that's communication. There are many ways to communicate "your price was too high".
rocqua 4y ago
You send them a formal letter to their listed place of business. You very likely will find amazon is not willing to engage in much negotiation, unless you happen to have a unique offer. But nothing requires amazon to engage.

crazygringo 4y ago

Well they actually do both, they charge by volume and percentage. There is absolutely logic in pricing in terms of setting a pricing floor, which often comes from a combination of fixed and variable costs. Of course you are right that there is flexibility above that, but again there's absolutely logic there as well in terms of price discrimination mechanisms. None of this is just arbitrary. These companies put a lot of thought, and logic, into their pricing mechanisms. Get it exactly right and you make a lot of money, get it a little bit wrong and you go out of business.