Came across this fascinating article from Joel Spolsky on how to price products. No, really, despite the use of graphs, it’s really interesting. He talks about software, but really it applies to anything. He makes some great points about companies getting people to pay what they’re willing to pay for a product, through market segmentation: concessions for the oldsters, cheap movie tickets during hours when employed people are at work, grocery discount coupons that most people with money don’t bother with.
One he doesn’t really talk about is early adopters vs late adopters. The brand new sparkly product vs last year’s model. Video games are a good example: I’m not a hardcore gamer and I can’t bring myself to pay more than A$50 for an XBox game. I’d rather wait until it drops. Hell, I haven’t had the time to finish Halo yet, so I won’t be getting Halo2 for a while.
Personally, I won’t run all over town looking for a particular bargain, unless on the day I’m feeling particularly stingy or am aiming to save a phenomenal amount of money. I don’t have the time. For instance, I recently bought a new hard drive for one of my computers. I bought it at Dick Smith because it’s just down the road (incorporated a healthy walk into it) and because I knew they had what I wanted in stock. I could probably have saved $20 or more by shopping around, but that involved time I didn’t have (or at least, didn’t want to spend). Also I suspect the bright appearance and perception of no problems with vanishing shops or argumentative return policies give me warm and fuzzy consumer confidence feelings.
When I get my car serviced, it goes to a dealer. Again, it could be done cheaper elsewhere, but the dealer almost always have all the parts required in stock, so I’m rarely without it for more than a day. Given the state of the PT system and my travel needs, it’s often inconvenient to be without my car, and that’s an inconvenience I’m prepared to pay a premium to avoid. Indeed, some people with more time than money don’t do preventative maintenance on their cars, simply fixing things when they break down. I prefer to avoid breakdowns, since I’m invariably in a hurry.
This is not to say I won’t leap at a bargain when I see it, or that for whatever reason I sometimes refuse to buy something, on the basis that I know or think I can get it cheaper somewhere else. I dare say if I were to cruise around the web sites and find my favourite Doctor Who story on DVD for $10 cheaper than anywhere else from a reputable retailer, I’d snap it up. I also frequent places like K-Mart and Big W when I’m buying kiddy clothes.
Obviously the equation is different according to how much time you have, how much money you have, and how much you can save. For now, I’m short of time. When somebody builds some kind of device that squeezes about 30 hours into the day, maybe for me that equation will change.