The Price is Not Always Right

Black Friday provided us another example of a practice of deception commonly used in retail marketing. Bonnie found an item destined to be a Christmas gift priced through a national specialty retailer online at $189, down from their (presumably) normal price of $349. Fortunately, she checked that against an standard Amazon price of $189. Stunned with the level of disparity, I was curious enough to see what the manufacturer quoted as the list price. Once again, $189. The retailer had simply and arbitrarily escalated the price by almost a factor of two just before the holidays. If that isn't deception, I don't know what is. It reminded us of a statement used by a water treatment system sales person in a recent visit. When we asked if we should wait to purchase a new softener from the company at the State Fair, where they heavily advertise special sales, the sale rep said, "to be frank, those prices are discounts off of an inflated price set about 30 days in advance, leaving you with the same price we're charging now."

What's amazing is how pervasive deceptive pricing is, especially in this day of price search engines on the web. It's easy to see when a price is deceptive. Yet retailers still cling to the practice, I guess because it still works. Which must mean that consumers still struggle with defining value for themselves. To many, the worth of something is more dependent on the percentage of stated discount than on the price itself.

Which brings me to the recent action by the Better Business Bureau against My Pillow, in which they lowered their rating to F because My Pillow violated their BBB Code of Advertising. “Continuous BOGO offers, which can then be construed as an item’s regular, everyday price, violate not only BBB’s Code of Advertising, which all BBB Accredited Businesses agree to abide by, but also other state and national organizations’ rules,” said Dana Badgerow, president of BBB in Minnesota and North Dakota. In looking at their code, the first article describes the very kind of comparative pricing used on Black Friday. Why is it they don't drop the rating of those large and national retailers as they have in picking on a local manufacturer of a simple pillow? While not arguing that My Pillow is deceptive in their marketing practices, it does seem the BBB is highly selective in their very public and promoted action in this case.

Another example of less than transparent pricing is our acceptance of taxation without representation through opaque government fees attached to services. The price of a rental car, or a hotel room, or a telephone call, or satellite television, or an automotive repair, is often not what you think it is - at least when you make a booking or subscribe to the service. Governments have frequently turned to fees and itemized taxation added to products and services, sometimes in collusion with the industry, to generate revenue. Think of your last automotive repair bill. Environmental fees and shop supplies added to the price of an oil change, which you thought was $17 but when you add all the regulatory add-ons is more like $22. Why am I paying for shop supplies separately? Why the environmental charge? Under that logic, there should be a toilet flushing charge, and a water charge, and a property tax recovery fee, etc., etc..

Or a rental car bill. The rental car is priced at $33 per day. So why is it when you've returned the car the charge works out to $55 per day? Concession fee recovery - $14, VII Rec (you have to dig to find out this is a "license recovery fee") $8, Rental Excise Tax - $4 (separate from the sales taxes from state and local jurisdictions), and the Customer Facility Charge of $20. All buried in the bill. At some airports, the fees exceed the price of the rental.

In my view, the price quoted should include all public charges and fees, since they are known and fixed. I'm thankful for the web based tools now available to help keep folks honest in pricing, and to take true cost out of the shadows for all to see.