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The Pluses and Minuses of Predatory Pricing

Rip-offs in a captive market

Vol. 4, Issue No. 50 | September 11, 2008 By Denny Hatch
15

IN THE NEWS

New Stadiums: Prices, and Outrage, Escalate
No American market has witnessed anything like it: two baseball teams and two football teams will open three new stadiums within 17 months and 20 miles of one another, with everything set to be in place by the fall of 2010. But even as fans of the Mets, the Yankees, the Giants and the Jets look forward to state-of-the-art stadium architecture, better sightlines, wider concourses and more bathrooms, some of them are also facing startling increases in ticket costs during a serious economic downturn.
--Richard Sandomir, The New York Times, Aug. 26, 2008
My wife, Peggy, and I are hooked on watching the Philadelphia Eagles on television every week during football season. It's a fun few hours.

A very successful businessman I know has been a New York Giants season ticket holder for more than 35 years. Even though he moved to another city, he's hung onto his seats, giving them to family or selling them through his broker at a fat profit when he can't attend a game.

Recently my friend got a bill from the Giants for $40,000--a one-time payment for two "personal seat licenses" (PSLs), giving him the right to buy season tickets for those seats in perpetuity. The money is needed, claims management, to help finance the new $1.6 billion stadium, even though many fans are feeling more like bankers than ticket holders.

Is it smart business to screw somebody who's been a loyal customer for 35 years?

Believe it or not, in some cases the answer is yes.

Why People Buy
People will buy from you for four reasons:

1. Price. If you're the cheapest guy in town, you'll acquire customers.

2. Service. If you're a pleasure to do business with--greet customers by name, offer vast inventory, guarantee satisfaction, have a generous returns policy--people will buy from you.

3. Exclusivity. If you are the only guy in the area--airline, sports team, newspaper or gourmet restaurant with the best wine list--customers may grumble, but will patronize you.

4. Quality. Rolls-Royce, Rolex, Louis Vuitton, Hermès, Johnston & Murphy, Thomas Pink, L.L.Bean--all do well because their merchandise is beautifully made and will last a long time.

Up for discussion is No. 3: exclusivity. Quite simply, if you're a fan of the New York Giants--and you were rewarded by their upset 2008 Super Bowl championship--chances are you won't jump ship to the New York Jets, even though Brett Favre is the new quarterback and both teams will be playing in the same new stadium. The Jets also are demanding big bucks for PSLs.

A Season Ticket Holder's Story
When our friend, the Giant's fan, came to Philly a couple weekends ago, we talked about the obscene new prices. He said he and fellow season ticket holder, George, talked it over and decided to pay the PSLs to keep their four seats. I e-mailed him that I was going to do a story and had some questions. His reply:

Takeaway Points to Consider

Before price gouging in your captive market, ask yourself some questions:

* How captive is your market, really? If you want to fly from Raleigh-Durham to the New York area, don't fly into Newark where you'll spend $499 with Continental. Fly into LaGuardia or JFK for $199. Same city, airport nine miles closer to midtown, and you save $300.

* "Happiness is having options."
--Lew Smith

* Will you be ticking off your customers by gouging them? For example, when we were at the Hotel Moderne in Caen, Normandy, WiFi was free. Now I fully expect to pay for WiFi when at sea, but I felt nickel-and-dimed by the additional $3.95 "activation fee." If Norwegian Cruise Line wanted to score points with me, it would have announced that it would pick up the $3.95 activation fee.

* I don't believe minor-league football exists. But I checked Philadelphia Phillies tickets at the new Citizens Bank Park and found the cost was $50 down to $16 for the top deck. For a family of 4, that can be up to $200 plus $10 parking plus food. If you just want to see baseball--and not necessarily the Phillies--the Camden Riversharks play just across the Delaware River in a beautiful, little, 6,400-seat stadium named for the Campbell Soup folks where the cost is a fraction of what you'd pay for the Phillies, and you're a lot closer to the action.

* "Price gouging is nothing more than charging what the market will bear."
--David M. Brown, Ludwig von Mises Institute

* If you sail on Norwegian Cruise Line and like a pop before dinner, stick a fifth of your favorite in a suitcase for surreptitious nips in the cabin.

* Do not nickel-and-dime your good customers.


Web Sites Related to Today’s Edition

"New Stadiums: Prices, and Outrage, Escalate"
http://tinyurl.com/6yh72d

"Break on Cost Of Textbooks Unlikely Before Last Bell, 2010"
http://tinyurl.com/58ozse

"Price Gouging Saves Lives"
http://mises.org/story/1593
 
15

COMMENTS

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Comment *
Most Recent Comments:
Judy - Posted on September 12, 2008
Denny, I'm not sure I understand the point of your article and what you wrote doesn't seem to support price gouging, although that was the point of the article. Maybe I'm dense. Anyway, I don't think price gouging is ever a good idea and it's tough to put a good marketing spin on it because people will recognize it for what it is, regardless of how you twist it around. That's why they call it "gouging", as in "having your eyes gouged out with a screwdriver". Very painful, not fun and no one wants it done to them.
Patricia - Posted on September 11, 2008
The Giants aren't the only one's playing the gouging game. It is the same story with the Yankees and Mets. I'm really not a sports fan, and don't understand the fascination with football at all, so would never pay to see the Giants myself (I've gone to games when friends offer a free ticket). But I do like the Yankees and was disappointed to hear they'll be significantly raising their ticket prices at the new stadium, so now I probably won't be going to their games. By the way, another thing both the Yankees and Mets did was substantially decrease the number of seats in their new stadiums--not sure if the reason was to increase demand or not, but it sux just as much. Not sure if Giants will be doing the same thing. As for pred pricing-- I guess that's capitalism, and that's just how it is.
Rebecca - Posted on September 11, 2008
Me again. I have a wonderful side business (maybe linked at the bottom of this article). It is an internet business where most of my customers are sick, chronic illnesses etc. I am a huge proponent of natural medicine (vs. high priced doctors). Don't want to argue about natural healing vs. how out of whack the allopathic medical field is -- at least not in this post! However, I do want to state what I do to avoid predatory pricing. My original supplier of my product was from Korea. They have the highest quality and had a brand for themselves, which I re-sold under my own brand name. However, I discounted my prices so people could actually afford them. I have a wonderful day job as a marketing manager, and this side business was just a hobby... a lucrative one, but still I didn't need it to pay my bills. Most of my customers are on fixed income or retired or disabled, and didn't have much money, but they were the ones who made the best use of my product. Well, I received an email from this Korean company saying they were going to stop selling to me if I didn't raise my prices, as I was "de-valuing" their brand. Well, I found my own factory overseas that performs a monthly quality audit (almost unheard of overseas!!) and used the same ingredients (nothing proprietary about it, just the best ingredient mix out there) and I saved so much money. Now, no one can dictate to me what I sell my product for, and the Korean company lost $10,000 per month of my money. And, I can give deals to my customers and know they are getting the best quality, and I offer a money back guarantee. I hate over-inflated prices. I am not going to pay a premium -- EXCEPT to have my groceries delivered to me :) But a $7.99 delivery fee is ok for me not having to go to the grocery store. www.purifyyourbody.com
Rebecca - Posted on September 11, 2008
Why doesn't everyone use www.half.com? That is where I got my textbooks for college. Sure, they are used, but I never paid more than $30 per book, and most of them were already highlighted, and had the CD that comes with most texts these days.I saved thousands of dollars over the course of my MBA program.
Jay - Posted on September 11, 2008
Annie - Your remarks reminded me of something. Not that you're doing this, but be careful about generic drugs. My wife has epilepsy and at one point our insurance company changed her Dilantin to generic. The next time her doctor checked her blood levels she was dangerously low. We cut open one of the generic gelcaps and found a hard pill, instead of powder, inside. My wife put it in water... it never dissolved. I think drugs are like baking: same ingredients, different bakers, different results. Generics are marketed to us as being the same as "brand names", but, in our experience, it wasn't true and could've had dire consequences. But, we're "captive customers", so now we pay extra for a brand name drugs that she needs.
Wash Phillips - Posted on September 11, 2008
And we wonder there the heck all that inflation comes from? Clearly, ALL is not driven by the price of gas. Is there something innately correct about Gekko's claim that "greed is good?" 3 new and expensive stadia in the same market? The quest for patron box space seems to have utterly overwhelmed concerns for any "blue-collar" fandom. Most stay home and catch the game on TV anyway, even if we have to sit through multiple repetitive TV spots of little interest. But who ARE those fat cats driving all that box demand (and thereby driving up the cost for the rest of us)? Call me modest, thrifty or cheap but my favorite lunch is a Polish/hotdog from Costco, with refillable Coke, for a buck and a half, plus tax. Loss leader or not, who cares when it's tasty, filling and seems fair (i.e. not extortion)?
Dave Gardner - Posted on September 11, 2008
Perceptions of "customer service" and "gouging" - Denny, your post parallels the mess being created by most American airlines. The airlines get involved in price wars and try to go cheaper and cheaper with their ticket prices. Their service is dismal. They nickel and dime the fare back up with charges for in-flight meals, baggage, carry-ons, in-flight snacks, pillows, blankets, and I'm surprised they don't have "pay-toilets" (don't give 'em any ideas!). I'd rather have the airline charge me a fare for the flight that incorporates and expects the costs involved with luggage, inflight-meals, and so on. I'd rather have airlines compete with EXCELLENT SERVICE and MAKING A WONDERFUL EXPERIENCE rather than trying to see who is cheapest. Being *cheap* leads to bankruptcy (Aloha Airlines, ATA, etc.) My wife and I are flying to Hong Kong and the Philippines in a few months. We're not taking the "cheapest flight" we can find. We're flying on a foreign carrier known for great service, and pleasant experience. You can choose from Cathay Pacific, Thai International, Japan Airlines, Korean Airlines, and so on... and not only get a reasonable deal, but you will get great service. Yes, I saw your article (I believe in Target Marketing) about airlines and why we shouldn't be fussing --that it's still a good deal. Well, yeah. If you count the miles/cost/time factor. But I still like a bit of what the airlines could be (and what they had been 20+ years ago)--with outstanding service and experience. Yes, I understand the economics involved with the price of fuel, the increased costs of employment and other factors on airline operation (my daughter is an ops manager at an airport). So... adjust for inflation... and give good service. That's what counts to me (and most likely... to most customers!).
Bill Murray - Posted on September 11, 2008
Good stuff, Denny, as always! As I've told many an overreaching vendor who thought he had a monopoly, "You can shear a sheep once a year; you can only skin him once." Then there's the gambling addict's question: "When is the only time you play a crooked wheel?" Answer: When it's the only game in town.
Garry - Posted on September 11, 2008
For Annie Wilson and anyone else who feels ripped off by phone companies... there is an alternative. I hesitate to "market" here, but you are NOT in a telephone captive market.
Mike McCormick - Posted on September 11, 2008
I have a problem with my old friend Peter Hochstein's example of predatory pricing. He wrote, "You have a potentially fatal chronic disease. I make pills that control the disease. They cost me 35 cents apiece to manufacture once my research costs are amortized, etc., comparing the very high cost of the drug to the very low cost of producing the drug. The tricky part is that bit about amortizing research costs. Those costs are astronomical and can take a very long time to amortize plus they do not include the expensive and time consuming FDA approval process. Then there are very high salaries, distribution costs, ROI for shareholders, lawyer fees and the costs of more or less constant lawsuits not to mention the very high judgments. Then there's the mind numbing cost of experiments for drugs that eventually fail. Perhaps the best response to Peter's issue is that just about every worthwhile drug developed in the world nowadays is developed right here in the USA. --Mike McCormick
Sean - Posted on September 11, 2008
Along the line of price gouging in sports, we recently scored 3rd row, 3rd base line seats to the Red Sox minor league team in Lowell. Total ticket price for 5 of us combined was $40. Great seats, great ballpark, great time. $40 might get you one bleacher seat in Fenway. As for college textbooks, I had friends a year behind me who would buy me dinner a few times throughout the semester in exchange for my old books. A good meal beats the $25 the college bookstore will give you any day!
Ken Kraetzer - Posted on September 11, 2008
Minor league football does exist it is called small college and high school. Prices for big college football rivals the NFL. Kids have just as good a time, hot dogs taste the same. The Giants and Jets took a big gamble, they had one of the best stadiums to watch a game. They could have added a restaurant pavilion to the existing building. The new stadiums provide means to segregate high price sections from the rest, separate entrances, restrooms, restaurants, seating sections. The NY teams also got caught in a bind on heavy inflation of construction costs. The Patriots new stadium built five years ago cost $250 million, The Giants -- Jets place well over a Billion, the new Yankee Stadium is over a billion as well. High prices for sporting events cause people to go less often, once or twice a year for Pro football. My wife and I go to the Mets 2x a month and sit half way up the grandstand, it is fine. My impression is the market for the NFL is more blue collar than corporate. Not sure what label goes on electricians, plumbers, and small business owners, these are a lot of the people I see at games. They have a limit on what they can spend and are hurt when the economy goes bad. The business plans for new stadium appear based on best case financial scenarios. Will be interesting to see how Yankees do with their Billion Dollar new stadium. Their current stadium was historic and had great sight lines was basically free of charge from the City of NY. According to the "New York Times" they will assume $55 million a year debt service, before needing additional "Tax Free Bonds" to be issued by the City on their behalf. I was quite happy with the old Yankee Stadium, it was a building that was part of the WWII era and reminded us of the sacrifice of the time.
Annie Wilson - Posted on September 11, 2008
I can avoid a lot of price gouging: I don't use cable TV services; super fast DSL (a resident doesn't need the equivalent of a T1 line); over-priced gaming system; subscription based services (disclaimer here - I'm a loyal NetFlix customer at the $8.95 a month plan, and watch an average of 8 discs that way - many have multiple show episodes... love British Mysteries).

I can't avoid the phone company nickle and diming me to to death; and I resent every penny. Get meds from overseas - can't get medical insurance here, so I sure can't afford those prices. No longer fly anywhere. By generic products much of the time to save money over the insane mark-ups.

Scream, a lot, over all of it.

Resentment and kick-back by consumers IS going to take a toll. Looks what happening to the US car companies.
Peter Hochstein - Posted on September 11, 2008
"Price gouging is nothing more than charging what the market will bear." Oh, please! Assume 1) You have a potentially fatal chronic disease 2) I make pills that control the disease. They cost me 35 cents a piece to manufacture once my research costs are amortized. I sell them to you for $10 a piece because I can get that price. That's $3,650 a year. Not much to filthy rich guys like you and me, Denny. Besides, our only chronic afflictions are chronic crankiness. But Imagine a little old lady on a fixed income of $17,000 a year who has a choice of having a stroke or starving. And there are lots of people with chronic diseases in her category. That's not gouging? No? I say it's no different than holding a loaded gun to your head and telling you, "Your money or your life." Hey, if you hand over your money, I'm only taking from you what the market can bear, right? Gimme a break!
Kristen - Posted on September 11, 2008
The real nickel-and-dime scheme with college textbooks is that at the end of the semester, most bookstores will "buy back" the books you already paid for depending on what they anticipate needing for the next semester. The catch is, if you spend $150 on a new math book, then the bookstore has a demand for the book next semester, so they buy it back at a reduced rate, say $25 (and they offer cash, which no college student is going to turn down at the end of the semester when their bank accounts are dwindling), then turn around and sell it used to some student on another campus for $120. The smartest thing a college student can do is buy and sell their books online. Cut out the middleman and avoid getting screwed.
Click here to view archived comments...
Archived Comments:
Judy - Posted on September 12, 2008
Denny, I'm not sure I understand the point of your article and what you wrote doesn't seem to support price gouging, although that was the point of the article. Maybe I'm dense. Anyway, I don't think price gouging is ever a good idea and it's tough to put a good marketing spin on it because people will recognize it for what it is, regardless of how you twist it around. That's why they call it "gouging", as in "having your eyes gouged out with a screwdriver". Very painful, not fun and no one wants it done to them.
Patricia - Posted on September 11, 2008
The Giants aren't the only one's playing the gouging game. It is the same story with the Yankees and Mets. I'm really not a sports fan, and don't understand the fascination with football at all, so would never pay to see the Giants myself (I've gone to games when friends offer a free ticket). But I do like the Yankees and was disappointed to hear they'll be significantly raising their ticket prices at the new stadium, so now I probably won't be going to their games. By the way, another thing both the Yankees and Mets did was substantially decrease the number of seats in their new stadiums--not sure if the reason was to increase demand or not, but it sux just as much. Not sure if Giants will be doing the same thing. As for pred pricing-- I guess that's capitalism, and that's just how it is.
Rebecca - Posted on September 11, 2008
Me again. I have a wonderful side business (maybe linked at the bottom of this article). It is an internet business where most of my customers are sick, chronic illnesses etc. I am a huge proponent of natural medicine (vs. high priced doctors). Don't want to argue about natural healing vs. how out of whack the allopathic medical field is -- at least not in this post! However, I do want to state what I do to avoid predatory pricing. My original supplier of my product was from Korea. They have the highest quality and had a brand for themselves, which I re-sold under my own brand name. However, I discounted my prices so people could actually afford them. I have a wonderful day job as a marketing manager, and this side business was just a hobby... a lucrative one, but still I didn't need it to pay my bills. Most of my customers are on fixed income or retired or disabled, and didn't have much money, but they were the ones who made the best use of my product. Well, I received an email from this Korean company saying they were going to stop selling to me if I didn't raise my prices, as I was "de-valuing" their brand. Well, I found my own factory overseas that performs a monthly quality audit (almost unheard of overseas!!) and used the same ingredients (nothing proprietary about it, just the best ingredient mix out there) and I saved so much money. Now, no one can dictate to me what I sell my product for, and the Korean company lost $10,000 per month of my money. And, I can give deals to my customers and know they are getting the best quality, and I offer a money back guarantee. I hate over-inflated prices. I am not going to pay a premium -- EXCEPT to have my groceries delivered to me :) But a $7.99 delivery fee is ok for me not having to go to the grocery store. www.purifyyourbody.com
Rebecca - Posted on September 11, 2008
Why doesn't everyone use www.half.com? That is where I got my textbooks for college. Sure, they are used, but I never paid more than $30 per book, and most of them were already highlighted, and had the CD that comes with most texts these days.I saved thousands of dollars over the course of my MBA program.
Jay - Posted on September 11, 2008
Annie - Your remarks reminded me of something. Not that you're doing this, but be careful about generic drugs. My wife has epilepsy and at one point our insurance company changed her Dilantin to generic. The next time her doctor checked her blood levels she was dangerously low. We cut open one of the generic gelcaps and found a hard pill, instead of powder, inside. My wife put it in water... it never dissolved. I think drugs are like baking: same ingredients, different bakers, different results. Generics are marketed to us as being the same as "brand names", but, in our experience, it wasn't true and could've had dire consequences. But, we're "captive customers", so now we pay extra for a brand name drugs that she needs.
Wash Phillips - Posted on September 11, 2008
And we wonder there the heck all that inflation comes from? Clearly, ALL is not driven by the price of gas. Is there something innately correct about Gekko's claim that "greed is good?" 3 new and expensive stadia in the same market? The quest for patron box space seems to have utterly overwhelmed concerns for any "blue-collar" fandom. Most stay home and catch the game on TV anyway, even if we have to sit through multiple repetitive TV spots of little interest. But who ARE those fat cats driving all that box demand (and thereby driving up the cost for the rest of us)? Call me modest, thrifty or cheap but my favorite lunch is a Polish/hotdog from Costco, with refillable Coke, for a buck and a half, plus tax. Loss leader or not, who cares when it's tasty, filling and seems fair (i.e. not extortion)?
Dave Gardner - Posted on September 11, 2008
Perceptions of "customer service" and "gouging" - Denny, your post parallels the mess being created by most American airlines. The airlines get involved in price wars and try to go cheaper and cheaper with their ticket prices. Their service is dismal. They nickel and dime the fare back up with charges for in-flight meals, baggage, carry-ons, in-flight snacks, pillows, blankets, and I'm surprised they don't have "pay-toilets" (don't give 'em any ideas!). I'd rather have the airline charge me a fare for the flight that incorporates and expects the costs involved with luggage, inflight-meals, and so on. I'd rather have airlines compete with EXCELLENT SERVICE and MAKING A WONDERFUL EXPERIENCE rather than trying to see who is cheapest. Being *cheap* leads to bankruptcy (Aloha Airlines, ATA, etc.) My wife and I are flying to Hong Kong and the Philippines in a few months. We're not taking the "cheapest flight" we can find. We're flying on a foreign carrier known for great service, and pleasant experience. You can choose from Cathay Pacific, Thai International, Japan Airlines, Korean Airlines, and so on... and not only get a reasonable deal, but you will get great service. Yes, I saw your article (I believe in Target Marketing) about airlines and why we shouldn't be fussing --that it's still a good deal. Well, yeah. If you count the miles/cost/time factor. But I still like a bit of what the airlines could be (and what they had been 20+ years ago)--with outstanding service and experience. Yes, I understand the economics involved with the price of fuel, the increased costs of employment and other factors on airline operation (my daughter is an ops manager at an airport). So... adjust for inflation... and give good service. That's what counts to me (and most likely... to most customers!).
Bill Murray - Posted on September 11, 2008
Good stuff, Denny, as always! As I've told many an overreaching vendor who thought he had a monopoly, "You can shear a sheep once a year; you can only skin him once." Then there's the gambling addict's question: "When is the only time you play a crooked wheel?" Answer: When it's the only game in town.
Garry - Posted on September 11, 2008
For Annie Wilson and anyone else who feels ripped off by phone companies... there is an alternative. I hesitate to "market" here, but you are NOT in a telephone captive market.
Mike McCormick - Posted on September 11, 2008
I have a problem with my old friend Peter Hochstein's example of predatory pricing. He wrote, "You have a potentially fatal chronic disease. I make pills that control the disease. They cost me 35 cents apiece to manufacture once my research costs are amortized, etc., comparing the very high cost of the drug to the very low cost of producing the drug. The tricky part is that bit about amortizing research costs. Those costs are astronomical and can take a very long time to amortize plus they do not include the expensive and time consuming FDA approval process. Then there are very high salaries, distribution costs, ROI for shareholders, lawyer fees and the costs of more or less constant lawsuits not to mention the very high judgments. Then there's the mind numbing cost of experiments for drugs that eventually fail. Perhaps the best response to Peter's issue is that just about every worthwhile drug developed in the world nowadays is developed right here in the USA. --Mike McCormick
Sean - Posted on September 11, 2008
Along the line of price gouging in sports, we recently scored 3rd row, 3rd base line seats to the Red Sox minor league team in Lowell. Total ticket price for 5 of us combined was $40. Great seats, great ballpark, great time. $40 might get you one bleacher seat in Fenway. As for college textbooks, I had friends a year behind me who would buy me dinner a few times throughout the semester in exchange for my old books. A good meal beats the $25 the college bookstore will give you any day!
Ken Kraetzer - Posted on September 11, 2008
Minor league football does exist it is called small college and high school. Prices for big college football rivals the NFL. Kids have just as good a time, hot dogs taste the same. The Giants and Jets took a big gamble, they had one of the best stadiums to watch a game. They could have added a restaurant pavilion to the existing building. The new stadiums provide means to segregate high price sections from the rest, separate entrances, restrooms, restaurants, seating sections. The NY teams also got caught in a bind on heavy inflation of construction costs. The Patriots new stadium built five years ago cost $250 million, The Giants -- Jets place well over a Billion, the new Yankee Stadium is over a billion as well. High prices for sporting events cause people to go less often, once or twice a year for Pro football. My wife and I go to the Mets 2x a month and sit half way up the grandstand, it is fine. My impression is the market for the NFL is more blue collar than corporate. Not sure what label goes on electricians, plumbers, and small business owners, these are a lot of the people I see at games. They have a limit on what they can spend and are hurt when the economy goes bad. The business plans for new stadium appear based on best case financial scenarios. Will be interesting to see how Yankees do with their Billion Dollar new stadium. Their current stadium was historic and had great sight lines was basically free of charge from the City of NY. According to the "New York Times" they will assume $55 million a year debt service, before needing additional "Tax Free Bonds" to be issued by the City on their behalf. I was quite happy with the old Yankee Stadium, it was a building that was part of the WWII era and reminded us of the sacrifice of the time.
Annie Wilson - Posted on September 11, 2008
I can avoid a lot of price gouging: I don't use cable TV services; super fast DSL (a resident doesn't need the equivalent of a T1 line); over-priced gaming system; subscription based services (disclaimer here - I'm a loyal NetFlix customer at the $8.95 a month plan, and watch an average of 8 discs that way - many have multiple show episodes... love British Mysteries).

I can't avoid the phone company nickle and diming me to to death; and I resent every penny. Get meds from overseas - can't get medical insurance here, so I sure can't afford those prices. No longer fly anywhere. By generic products much of the time to save money over the insane mark-ups.

Scream, a lot, over all of it.

Resentment and kick-back by consumers IS going to take a toll. Looks what happening to the US car companies.
Peter Hochstein - Posted on September 11, 2008
"Price gouging is nothing more than charging what the market will bear." Oh, please! Assume 1) You have a potentially fatal chronic disease 2) I make pills that control the disease. They cost me 35 cents a piece to manufacture once my research costs are amortized. I sell them to you for $10 a piece because I can get that price. That's $3,650 a year. Not much to filthy rich guys like you and me, Denny. Besides, our only chronic afflictions are chronic crankiness. But Imagine a little old lady on a fixed income of $17,000 a year who has a choice of having a stroke or starving. And there are lots of people with chronic diseases in her category. That's not gouging? No? I say it's no different than holding a loaded gun to your head and telling you, "Your money or your life." Hey, if you hand over your money, I'm only taking from you what the market can bear, right? Gimme a break!
Kristen - Posted on September 11, 2008
The real nickel-and-dime scheme with college textbooks is that at the end of the semester, most bookstores will "buy back" the books you already paid for depending on what they anticipate needing for the next semester. The catch is, if you spend $150 on a new math book, then the bookstore has a demand for the book next semester, so they buy it back at a reduced rate, say $25 (and they offer cash, which no college student is going to turn down at the end of the semester when their bank accounts are dwindling), then turn around and sell it used to some student on another campus for $120. The smartest thing a college student can do is buy and sell their books online. Cut out the middleman and avoid getting screwed.