What businesses drive you insane with indefensible or incoherent pricing policies?

In My Humble Opinion
81

[QUOTE=VCO3]
And then there’s I-tunes, but this one’s simple; the reason that a CD is $15 or so is 90% due to the cost of manufacturing an actual physical CD and getting it onto shelves in a store. When you remove all of that, the remaining digital content should really only cost about 1 or so for an *entire album*. It drives me insane that people buy into their .99 per song pricing structure; it’s like telling someone that you can buy a pack of gum for 1 or you can buy individual sticks of gum for .50 each, and watching them pony up the $.50 per individual stick. Smack!
[/QUOTE]

To follow up on what others have said, price has very little to do with cost. You’re missing - entirely - the point of charging 99 cents a song: Because they can.

It doesn’t matter if a CD costs $1 or $100 to physically produce. They sell songs on iTunes for whatever the optimum price is. Why would they sell them for ten cents a pop if they can sell them for 99? That would be insane.

82

[QUOTE=VCO3]
They’re actually two completely different drinks - an Americano is made with 2+ shots of espresso and water, while “Coffee” is just drip coffee brewed from ground beans. Now, we can argue about whether espresso should be more expensive than other types of coffee, but there is a definite difference between the two drinks.
[/QUOTE]

Well, isn’t the whole idea that espresso is just really, really concentrated coffee?? Thus, by adding water back to it you’re just ending back up with what you’d have before the espresso process?

83

[QUOTE=beergeek279]
Well, isn’t the whole idea that espresso is just really, really concentrated coffee?? Thus, by adding water back to it you’re just ending back up with what you’d have before the espresso process?
[/QUOTE]

Really really really concetrated coffee would be instant, not espresso. Espresso is pressure brewed.

84

[QUOTE=beergeek279]
Well, isn’t the whole idea that espresso is just really, really concentrated coffee?? Thus, by adding water back to it you’re just ending back up with what you’d have before the espresso process?
[/QUOTE]

The beans are roasted and prepared in a different way, though, and are generally more expensive.

85

Needed to replace 2 side mirrors on a standard Ford econoline work van. One left, one right, standard item, standard work van. Dealership, almost $300 each, not including installation. Auto parts store, about $155 each, no installation. Bought them on Ebay, licensed part, $35.00 each, plus shipping, ended up being $50 each. A savings of approx $500 from the dealer, $200 from the parts store. The mark up is incredible. Unbelievable. Same exact item.

86

Something else that sort of falls under this category for me is the way that mechanic labor prices work - as I understand it, each procedure has an official “labor time” assigned to it regardless of how long it actually takes the mechanic to do the work. So replacing an alternator might be assigned “two hours of labor,” and you have to pay for two hours of labor even if the guy can get it done in 40 minutes. In fact, with that setup, it’s in the mechanic’s best interest to fly through all of the work as quickly as possibly so he can double-down his earnings. It seems like something that should be illegal, but is instead the official way it’s done.

87

[QUOTE=Millit the Frail]
Preach it.

The worst pricing weirdness in fashion, however, goes to designer handbags. I can buy a really cute purse at Target for $20 or less. A Target purse holds my stuff, I’ve never had one break or fall apart even after a couple of years of use, and hey, in a year or so when the style changes, if I really want, I can go to Target and get a new, stylish, current purse for another $20. Even at a store where I buy my work clothing, I could get a nice purse for under $40, I’m sure.

[/QUOTE]

You aren’t genuinely suggesting that a Target bag is of similar quality to a high end bag- perhaps a Louis Vuitton. If you are, I highly suggest you pop into a LV Boutique with your Target bag and do some comparing and contrasting.

Now, I’m not suggesting that it is logical for someone to pay $1200 for a purse (I have some expensive bags myself, but then again I think it’s stupid to spend tons of money on video games and things that others are more liberal about buying), but there is a genuine difference between a Target bag that costs you $20 and a Louis Vuitton bag. Hell, forget LV. Those are insanely expensive. How about Coach? A $200 Coach bag VS a $20 Target bag. (Factor in the countless Coach Outlets where the bags are often 70% off and that’s an even bigger steal).

$19.99 from Target. Cotton/Polyester Blend. Fake leather detailing.

Coach- $200. Genuine leather. High quality detailing (stitching and such). The Coach store will forever clean your bag for free. And the Coach bag does something else the Target bag doesn’t do- it goes up in value if you care for it.

And that last part is entirely true. I bought what turned out to be a Limited Edition Coach bag that I thought was just adorable for $200. Within a year, I saw ads on the internet for people willing to pay double what I did for it. I took it into a Coach store to ask how to clean it and the three girls helping me were trying to out bid one another to buy it from me. Who knew it was that special? I just thought it was pretty.

Don’t get me wrong though, I have Target bags too. I am a total cheapskate. That said, to say there is no legitimate difference between cheap handbags and high end ones— that’s disingenuous.

88

No, the insanity shows not when you compare a cheap product to an insanely expensive one, but when you compare a good quality product to an insanely expensive one.

For example, there’s no question that a $500 Seiko is a better watch than a $20 Timex (in terms of craftsmanship - if they’re both quartz, they’ll both tell time with the same accuracy). But when you compare the $500 Seiko to a $2000 watch, it gets a little tougher.

Likewise, a $5,000 stereo system will obviously sound much, much better than a $500 stereo system. But a $50,000 stereo system may not sound measurably better than the $5,000 one.

If you plot value against cost, you’ll get an exponential curve. Way down on the left hand tail where the curve is flattest, increased price translates pretty well into increased quality or performance. Once you start getting into the real steep part of the slope, it begins to become insane. When you start getting into $2000 handbags, $50,000 watches, and $5,000 suits, it becomes very difficult to see where the value is - other than the mere fact that they are that expensive, and therefore desirable to those who need to have ‘the best’ and price is no object.

89

[QUOTE=Liberal]
Airlines.
[/QUOTE]

Airline pricing makes complete sense. Dave Barry explained it years ago:

The Master discusses expensive stereo systems here.

90

[QUOTE=Throatwarbler Mangrove]
I think the primary cost component of places like Starbucks would be real estate- that is the rent on the location.
[/QUOTE]

Well, not always. I know a location that for a couple of decades was home to about a dozen different restaurants. For a variety of reasons, no one wanted to eat there no matter what it was currently. Now a Starbucks has taken over and seems to be doing well. I suspect they get a pretty good deal on rent given the history of failed businesses.

91

[QUOTE=VCO3]
Something else that sort of falls under this category for me is the way that mechanic labor prices work - as I understand it, each procedure has an official “labor time” assigned to it regardless of how long it actually takes the mechanic to do the work. So replacing an alternator might be assigned “two hours of labor,” and you have to pay for two hours of labor even if the guy can get it done in 40 minutes. In fact, with that setup, it’s in the mechanic’s best interest to fly through all of the work as quickly as possibly so he can double-down his earnings. It seems like something that should be illegal, but is instead the official way it’s done.
[/QUOTE]

My theory on this is that it is designed to protect both the mechanic’s employer and the customer. It protects the customer by assigning a flat rate to a job, so you have some idea what work will cost before it is performed, and can’t be saddled with a massive bill you MUST pay to get your keys back. And it protects the store by making clear to employees that dawdling on the job will not lead to the same pay for less work.

92

[QUOTE=Sam Stone]
Cosmetics. Especially the really high prices ones. You think paying $500 for a Gucci handbag is insane? Try $500 for a two-ounce container of some exotic facial cream! And what’s worse, the stuff is virtually identical to the $20 variety. In fact, a lot of it comes from the same batch of material, and they’ll just add some random inert glurge to the high end stuff and call it the special ingredient to justify the ludicrous price.
[/QUOTE]

Nope. I’ve worked industries that did that (same product sold under two different brands to different markets at different prices) and it really was exactly the same product. No additional “random inert glurge”. The same, except for the label and the logos on the paperwork. Even the containers are sometimes the same :smack:

93

2 pages and no one has mentioned cell phone pricing? It’s evened out now, but it used to be awful to try to compare plans between any 2 carriers. It’s still sucky, because you can:

go with Verizon, who has (in my opinion) the best coverage area and not a lot of dropped calls, but who nickel and dimes you for every feature and cripples the neat things your phone can do.

go with cingular/at&t, who has inferior voice service but doesn’t cripple the phones. oh, and they let you rollover your minutes.

go with T-mobile or sprint, whose coverage areas are not as good once you get outside major metro areas, and they usually make you pay more for the phones.

Nobody is offering the same product, they all have just slightly different features so that no two plans are comparable.

94

[QUOTE=groman]
That one actually makes sense. Most of these airlines have as part of their conditions that you must use the return leg of your trip. If you don’t, you owe them full fare. One way travel is typically more expensive, not just with airlines. Reasoning goes that if you need a one-way ticket, a roundtrip ticket that requires you to return won’t do, so you are stuck buying a one-way ticket. There’s a lot less people buying one-way tickets so it’s not as competitive, so they can charge more.
[/QUOTE]

I disagree. It makes no sense whatsoever for an airline to charge more for a one-way ticket than for a round-trip ticket. You will not be able to convince me that it costs the airlines more to send me to Houston one-way than to send me to Houston and back.

Your overall argument boils down to: “Fewer people need one-way tickets, so we’ll screw those few people.” Of course, some of these people have sick fathers who may be dying and they’re not sure when they are coming back, depending on whether or not a funeral will be necessary. :frowning:

As another user wrote previously, at least you can generally buy the round-trip ticket and toss the ticket for the return leg. I’ve never heard anything about actually owing an airline full fare if you don’t use the return leg, but this would be complete insanity.

The worst thing that I’ve ever heard is that you forfeit the rest of your ticket if you don’t complete your travel as scheduled.

95

No-one has mentioned eye-glass frames?

The designer frames cost $250+ and, unless you go to Walmart the others don’t get much cheaper than $125.

Seems ridiculous for a few grams of wire and plastic!

96

[QUOTE=Nava]
Nope. I’ve worked industries that did that (same product sold under two different brands to different markets at different prices) and it really was exactly the same product. No additional “random inert glurge”. The same, except for the label and the logos on the paperwork. Even the containers are sometimes the same :smack:
[/QUOTE]

Pretty true. I’ve tried Lancome and L’Oreal and they’re pretty similar, but L’Oreal is a boatload cheaper (same parent company; I can’t come up with other examples off the top of my head, but there are quite a few)

VCNJ~

97

Airline prices are incoherent because airlines are trying to simultaneously satisfy two goals.

Of course, they don’t want the plane to fly empty. Every empty seat on that flight is money flushed down the drain. So they have a huge incentive to discount the seat as the departure time nears.

The contrary goal is to charge high prices to people who have inflexible schedules. So if you show up at the airport and need to be on the next flight to Miami, they want to charge you as much as possible. And a lot of these people are business travelers, where the company is paying for the ticket. So airlines try to structure their prices so that business travelers on inflexible schedules pay the most. So a round-trip flight with a layover over the weekend is much cheaper than one that gets you home for the weekend, because business travelers want to spend the weekend at home.

So on the one hand, if you show up at the gate at the last minute they want to charge you as much as possible, on the other hand they desperately want to avoid flying with an empty seat and therefore they want to offer you a deep discount. Schizophrenia results.

One-way tickets though are truly insane. A one-way ticket generally costs more than a round-trip ticket, which makes no sense. The airline can’t force you to use the return ticket, how can they? Has anyone anywhere been sued by the airlines for the cost of a one-way ticket because they threw away the return ticket? How could they possibly win? And what exactly is the theory behind high price one-way tickets? I could see a pricing structure where a one-way is 75% of a round trip, but MORE than a round trip? What revenue do the airlines think they’re getting, what customers do they think they’re capturing and forcing them to pay the higher price? And even if the posted prices are higher, anyone with half a brain could throw away the return ticket instead of getting a one way ticket. It makes no sense.

98

[QUOTE=Veuve_ClicquotNJ]
Pretty true. I’ve tried Lancome and L’Oreal and they’re pretty similar, but L’Oreal is a boatload cheaper (same parent company; I can’t come up with other examples off the top of my head, but there are quite a few)

VCNJ~
[/QUOTE]

Yup. The other way to compare on stuff like this is to just look for the “active ingredient” and then compare percentages. I have found sometimes that the store brand has the same or higher concentrations of the active ingredient.

Of course, someone had to pay the researchers in the labs for the time they spent coming up with the breakthrough in skin technology or whatever, and that ends up being the primary company to release the product. So I am aware that the store brand just copied the first brand, which is cheaper than doing the innovating yourself. But I let them battle it out and just go with my cheaper and just as good item. :slight_smile:

One thing people often don’t think about in pricing is R&D. When you look at component parts for almost anything you wonder why something costs so much. Then think about the time spent in development, the engineers that designed it, the failed attempts, the time testing the product, the machines that had to be designed and built to make the item, etc. Then sometimes I wonder why it isn’t more!

I am always amazed at the huge price drop in any new tech product after the first year or 2. People pay a huge premium to be the first to have a new product. It really is about how much people are willing to pay, not how much it cost to make an item. If everything was priced on the same principle, say, cost to manufacture plus 10% I think everyone’s eyes would be opened a little. Some stuff would cost a lot more, some a lot less.

99

[QUOTE=K364]
No-one has mentioned eye-glass frames?

The designer frames cost $250+ and, unless you go to Walmart the others don’t get much cheaper than $125.

Seems ridiculous for a few grams of wire and plastic!
[/QUOTE]

My rimless reading glasses were about $20. The virtually identical frames with prescription lenses (old-style bifocals) are $260. Until I start tripping over the furniture, I’m sticking with the cheaters.

100

I, uh, take it that nobody has ever done a mass mailing of differing sized (and weight) objects at your local post office?

The rate charts are 37 pages.

Which is really nothing. The instructions on how to identify which kind of mailing you’re going to perform, how to price each piece, and how to sort, bag, and tag the stuff?

1,761 pages

What do I win? :wink: