6 ms·

People complain about this relentlessly, but never change. Additionally, every single business owner I know complains that whatever it is they're selling, (1)

People complain about this relentlessly, but never change. Additionally, every single business owner I know complains that whatever it is they're selling, (1) it isn't worth the brain damage to sell to customers looking for the lowest price, (2) as long as people comparison shop in a harebrained way, hook pricing (aka up front pricing that looks low and turns out high) is only rational. It's not like they're providing a bad service for the cost.

pixl97 3y ago
I mean this is why a lot of first world countries have consumer protections that demands the retailer/service publishes prices up front. Course in the US there is quite a counter lobbyist group that prevents just that from happening.
thfuran 3y ago
>hook pricing (aka up front pricing that looks low and turns out high) is only rational. Yes, many deceptive business practices are rational acts on the part of the businesses. That doesn't mean they should be tolerated.
- thaumaturgy 3y ago
  I have begun to think of this as a "large population error", and I'm noticing it in a lot of different markets. At small scales, annoying your customers is bad business. You only need to lose a few before it begins to hurt. Customer complaints are more likely to be a consideration in business decisions. At larger scales, a business can begin to preferentially adopt practices intended to drive away some customers. Perhaps you don't want the "pathological" customers, to borrow one of Patrick McKenzie's terms. You can make more money with less effort by being more selective about your customers. At extremely large scales, you largely stop thinking about groups of customers altogether. All of your decisions are driven by aggregates -- did all sales go up this quarter, or down? The effort required to do a deep dive into the behaviors and preferences of any individual market segment may not make sense anymore on a quarterly basis. At this scale, you might be able to afford to annoy tens of thousands of customers and still have a very nice graph next quarter. So, when someone says a business practice shouldn't be "tolerated", that's a perfectly reasonable position, except it doesn't actually work for businesses operating at extremely large scales. It's too difficult for customers to organize a protest in a way that will influence that business's decision-making. So much business has moved online in the last 20 years, while the US has leveled off at 80% urbanization over the same time period, along with more and more businesses congealing into BigCos, combined with the recent domination of private equity: lots and lots of things are now operating at a scale where customer concerns just aren't a part of the business model anymore. Coffee shops, fast food, big-box retail, online retail, SaaS, PaaS: all of these can thrive while running on exorbitant pricing and abusive customer policies, because their volume of customers is so large that it's nearly impossible to be so bad that you'll piss off enough customers to impact your decision-making. (Unless you're Sony.)
  - staunton 3y ago
    > It's too difficult for customers to organize a protest in a way that will influence that business's decision-making. It's actually very easy (in theory). You (vote for someone who will) ban fraudulent and anti-competitive behavior, sue the offenders and have them pay huge fines. The fact that this very rarely works out is a failure of the political system.
  - s1artibartfast 3y ago
    The intuitive answer is competition, where customers move from user-hostile companies to new ones. The problem in my mind is that the largest companies have too much efficiencies of scale to compete with on price. When competition can't undercut on price, it is hard to argue that customers aren't being served by monopoly mega corps.
    - thaumaturgy 3y ago
      Yeah, this is a pretty standard answer to the same market failures that so many people have been talking about recently. It assumes though that low prices are the best possible benefit consumers might get from competition, and it also assumes that megacorps necessarily lead to the lowest possible prices for consumers. Chokepoint Capitalism is a pretty okay book that kicks the legs out from under both assumptions.
      - s1artibartfast 3y ago
        I don't think I'm making any assumptions about what's best. I bring it up because the most common argent levied against mega corps is using monopoly power to drive up prices, which I don't think is always true. If people specifically want to break them up to drive down prices, I don't think that will always be successful.
  - thfuran 3y ago
    >So, when someone says a business practice shouldn't be "tolerated", that's a perfectly reasonable position, except it doesn't actually work for businesses operating at extremely large scales. I'm not really sure what you mean. The EU has managed to put together much better consumer protections in a lot of areas. There are large businesses there.
- wongarsu 3y ago
  Which is exactly why they should be banned to keep the market overall healthy. Preventing deceptive practices in a market economy this is a prime example of useful government "intervention", just like supporting contract enforcement or preventing theft
  - AnthonyMouse 3y ago
    They can always justify it as not knowing the price. The sales tax rate is different in different places. It costs a different amount to ship to Florida than Alaska and picking it up at the factory is free (even if nobody does). The advertised price is if you have your own modem, renting one from the cable company is more. None of these are inherently wrong. You should be paying more if you're having it shipped to a remote location with high shipping costs, and the cost of that shouldn't be dumped on every other customer. But it's kind of a loophole if you want the advertised price to be lower than what people are actually going to be paying in practice.
    - wongarsu 3y ago
      There are some cases where not knowing the price is reasonable. As you say, shipping can often only be calculated if you know all items and their destination. If you advertise on national TV you can't name a price that includes sales price (unless the company eats the difference). But these could be treated as tightly regulated necessary evils, not as a justification that showing final prices is always impossible. There is no reason you can't show final price including tax on the label in a physical shop. There is no reason why a restaurant should be able to charge a 20% service charge instead of increasing regular prices by 20%. If you are buying a concert ticket or airline ticket the displayed price should include all mandatory fees. They can upsell you on additional services, but they can't suddenly notice in the last checkout step that your price is higher because the website you are using is charging a fee; that fee was known to them at the beginning of the transaction and should have to be disclosed at that point in time at the latest. If you want to go even further you can also dictate that shipping and handling fees are only allowed to include reasonable costs of actual shipping and handling. All of these are normal common-sense regulations in most first-world countries.
- satvikpendem 3y ago
  This argument reminds me of pre-ordering games. People are simply too dumb to stop doing so, even if it's in their best interest. But those that do are often rewarded for not pre-ordering in the form of lower prices and more content, hen the game eventually goes on sale. It doesn't mean that pre-ordering should be banned, however.
duxup 3y ago
> it isn't worth the brain damage to sell to customers looking for the lowest price The cheapest customers are always the most expensive to work with. It’s a sad reality. I worked at several companies who for some foolish reason saw the cheapo customers as some untapped market and when they raced to the bottom they lost every time.
antisthenes 3y ago
> It's not like they're providing a bad service for the cost. When it comes to healthcare, they absolutely are. The US spends more than double for the same outcomes as other developed countries. And no, this isn't because of the cost to develop new and novel drugs (which aren't used in 99.9% of routine health care)
jonahhorowitz 3y ago
California gets a lot of flack for having too much regulation, but this change is very welcome for consumers. No more junk fees in CA. - https://www.sfgate.com/food/article/sf-restaurants-junk-fees-law-19436419.php https://www.sfgate.com/food/article/sf-restaurants-junk-fees...
- autoexecbat 3y ago
  Is this just restaurants?
  - justinc8687 3y ago
    No, it’s everything. Restaurants somehow thought they’d be exempt and the article is referencing recent explicit guidance that they will not be.
- theoldlove 2y ago
  Too bad DoorDash is exempt
krisoft 3y ago
> People complain about this relentlessly, but never change What do you mean by this? How would “people change” to get out of resort fees or confusing pricing systems?
- joshstrange 3y ago
  I believe they are saying that people fall for the hook pricing and won't go with an alternative that is upfront about their price (because it looks higher). If companies aren't rewarded for doing the "right" thing then why would they do it?
- vanviegen 3y ago
  Vote for politicians that haven't been bought by big corp (yet).
- jimjimjim 3y ago
  "people" as a group need to stop shopping solely on price. Btw, You may look at other factors but as a general rule "people" look at price.
- tpm 3y ago
  Ban them. Here in the EU such behavior is mostly illegal.
- s1artibartfast 3y ago
  people could stop buying from sellers with confusing pricing systems. People are capable of change.
diob 3y ago
This is why other countries just have laws for this, it evens the playing field and removes the bs.
deleted 3y ago
[deleted]

pixl97 3y ago

I mean this is why a lot of first world countries have consumer protections that demands the retailer/service publishes prices up front. Course in the US there is quite a counter lobbyist group that prevents just that from happening.

thfuran 3y ago

>hook pricing (aka up front pricing that looks low and turns out high) is only rational. Yes, many deceptive business practices are rational acts on the part of the businesses. That doesn't mean they should be tolerated.

thaumaturgy 3y ago
I have begun to think of this as a "large population error", and I'm noticing it in a lot of different markets. At small scales, annoying your customers is bad business. You only need to lose a few before it begins to hurt. Customer complaints are more likely to be a consideration in business decisions. At larger scales, a business can begin to preferentially adopt practices intended to drive away some customers. Perhaps you don't want the "pathological" customers, to borrow one of Patrick McKenzie's terms. You can make more money with less effort by being more selective about your customers. At extremely large scales, you largely stop thinking about groups of customers altogether. All of your decisions are driven by aggregates -- did all sales go up this quarter, or down? The effort required to do a deep dive into the behaviors and preferences of any individual market segment may not make sense anymore on a quarterly basis. At this scale, you might be able to afford to annoy tens of thousands of customers and still have a very nice graph next quarter. So, when someone says a business practice shouldn't be "tolerated", that's a perfectly reasonable position, except it doesn't actually work for businesses operating at extremely large scales. It's too difficult for customers to organize a protest in a way that will influence that business's decision-making. So much business has moved online in the last 20 years, while the US has leveled off at 80% urbanization over the same time period, along with more and more businesses congealing into BigCos, combined with the recent domination of private equity: lots and lots of things are now operating at a scale where customer concerns just aren't a part of the business model anymore. Coffee shops, fast food, big-box retail, online retail, SaaS, PaaS: all of these can thrive while running on exorbitant pricing and abusive customer policies, because their volume of customers is so large that it's nearly impossible to be so bad that you'll piss off enough customers to impact your decision-making. (Unless you're Sony.)
- staunton 3y ago
  > It's too difficult for customers to organize a protest in a way that will influence that business's decision-making. It's actually very easy (in theory). You (vote for someone who will) ban fraudulent and anti-competitive behavior, sue the offenders and have them pay huge fines. The fact that this very rarely works out is a failure of the political system.
- s1artibartfast 3y ago
  The intuitive answer is competition, where customers move from user-hostile companies to new ones. The problem in my mind is that the largest companies have too much efficiencies of scale to compete with on price. When competition can't undercut on price, it is hard to argue that customers aren't being served by monopoly mega corps.
  - thaumaturgy 3y ago
    Yeah, this is a pretty standard answer to the same market failures that so many people have been talking about recently. It assumes though that low prices are the best possible benefit consumers might get from competition, and it also assumes that megacorps necessarily lead to the lowest possible prices for consumers. Chokepoint Capitalism is a pretty okay book that kicks the legs out from under both assumptions.
    - s1artibartfast 3y ago
      I don't think I'm making any assumptions about what's best. I bring it up because the most common argent levied against mega corps is using monopoly power to drive up prices, which I don't think is always true. If people specifically want to break them up to drive down prices, I don't think that will always be successful.
- thfuran 3y ago
  >So, when someone says a business practice shouldn't be "tolerated", that's a perfectly reasonable position, except it doesn't actually work for businesses operating at extremely large scales. I'm not really sure what you mean. The EU has managed to put together much better consumer protections in a lot of areas. There are large businesses there.
wongarsu 3y ago
Which is exactly why they should be banned to keep the market overall healthy. Preventing deceptive practices in a market economy this is a prime example of useful government "intervention", just like supporting contract enforcement or preventing theft
- AnthonyMouse 3y ago
  They can always justify it as not knowing the price. The sales tax rate is different in different places. It costs a different amount to ship to Florida than Alaska and picking it up at the factory is free (even if nobody does). The advertised price is if you have your own modem, renting one from the cable company is more. None of these are inherently wrong. You should be paying more if you're having it shipped to a remote location with high shipping costs, and the cost of that shouldn't be dumped on every other customer. But it's kind of a loophole if you want the advertised price to be lower than what people are actually going to be paying in practice.
  - wongarsu 3y ago
    There are some cases where not knowing the price is reasonable. As you say, shipping can often only be calculated if you know all items and their destination. If you advertise on national TV you can't name a price that includes sales price (unless the company eats the difference). But these could be treated as tightly regulated necessary evils, not as a justification that showing final prices is always impossible. There is no reason you can't show final price including tax on the label in a physical shop. There is no reason why a restaurant should be able to charge a 20% service charge instead of increasing regular prices by 20%. If you are buying a concert ticket or airline ticket the displayed price should include all mandatory fees. They can upsell you on additional services, but they can't suddenly notice in the last checkout step that your price is higher because the website you are using is charging a fee; that fee was known to them at the beginning of the transaction and should have to be disclosed at that point in time at the latest. If you want to go even further you can also dictate that shipping and handling fees are only allowed to include reasonable costs of actual shipping and handling. All of these are normal common-sense regulations in most first-world countries.
satvikpendem 3y ago
This argument reminds me of pre-ordering games. People are simply too dumb to stop doing so, even if it's in their best interest. But those that do are often rewarded for not pre-ordering in the form of lower prices and more content, hen the game eventually goes on sale. It doesn't mean that pre-ordering should be banned, however.

duxup 3y ago

> it isn't worth the brain damage to sell to customers looking for the lowest price The cheapest customers are always the most expensive to work with. It’s a sad reality. I worked at several companies who for some foolish reason saw the cheapo customers as some untapped market and when they raced to the bottom they lost every time.

antisthenes 3y ago

> It's not like they're providing a bad service for the cost. When it comes to healthcare, they absolutely are. The US spends more than double for the same outcomes as other developed countries. And no, this isn't because of the cost to develop new and novel drugs (which aren't used in 99.9% of routine health care)

jonahhorowitz 3y ago

California gets a lot of flack for having too much regulation, but this change is very welcome for consumers. No more junk fees in CA. - https://www.sfgate.com/food/article/sf-restaurants-junk-fees-law-19436419.php https://www.sfgate.com/food/article/sf-restaurants-junk-fees...

autoexecbat 3y ago
Is this just restaurants?
- justinc8687 3y ago
  No, it’s everything. Restaurants somehow thought they’d be exempt and the article is referencing recent explicit guidance that they will not be.
theoldlove 2y ago
Too bad DoorDash is exempt

krisoft 3y ago

> People complain about this relentlessly, but never change What do you mean by this? How would “people change” to get out of resort fees or confusing pricing systems?

joshstrange 3y ago
I believe they are saying that people fall for the hook pricing and won't go with an alternative that is upfront about their price (because it looks higher). If companies aren't rewarded for doing the "right" thing then why would they do it?
vanviegen 3y ago
Vote for politicians that haven't been bought by big corp (yet).
jimjimjim 3y ago
"people" as a group need to stop shopping solely on price. Btw, You may look at other factors but as a general rule "people" look at price.
tpm 3y ago
Ban them. Here in the EU such behavior is mostly illegal.
s1artibartfast 3y ago
people could stop buying from sellers with confusing pricing systems. People are capable of change.

diob 3y ago

This is why other countries just have laws for this, it evens the playing field and removes the bs.

deleted 3y ago

[deleted]