What You Pay
After writing several thousand words on Why Retail Prices Don't Exist Anymore I forgot the most important idea. A reader wrote confused. "If retail prices don't exist what do I pay," was their very good question. Duh, should have had a V-8 and started with this. When we buy ANYTHING we pay a contextually sensitive price, the price of the moment. There is a price range, but not a single price and this is true for everything we buy.
"If what you say is true then how can I do price comparisons," was another excellent question asked by my confused reader. Not sure she liked my answer. "You can't compare prices," was my simple answer. At least you can't compare prices with any degree of certainty of anything. I suggested two books to explain the psychology behind my answer: Paradox of Choice: Why less is more by Barry Schwartz and Predictably Irrational by Dan Ariely. Me suggesting books, I know what a shock right (lol).
Paradox shows how fruitless drilling prices can become. This reminds me of my mother, who I love very much but who is not an economist. Mom used to come home with $300 worth of groceries and with great pride explain how much she "saved" using coupons. Dan Ariely knows my mother and most humans. Predictably Irrational defines what one of my P&G or M&M/Mars bosses taught me. "Martin," I remember someone more powerful than me saying to a twenty five year old me, "people buy with emotion and they justify with logic." Yep that is what we do. Predictably Irrationality extends to our lives too. The Case Against Divorce makes a case for why much of divorce is emotional decisions back filled with logic. (That divorce ship has sailed for me, but I wrote the piece to help those who may be able to slow their divorce train.
Price Comparisons = Dumb
Comparing prices doesn't work. You are seeing prices created for you, created to trigger your predictably irrational behavior (buying) with just enough logic to justify your actions. Price comparisons are dumb also because, as Paradox points out, the time you spend to make the comparison INCREASES your costs. Searching burns up your most valuable thing - TIME. Guess how many people factor in search time to savings? Hardly anyone because we are, deep in our core dinosaur brain, hunter gatherers. Our ancient genes trick higher level functions. Who likes to do math anyway? If we did the math we would see many buying decisions are out of our immediate logical control. This sounds much too Freudian for a Skinnerian (and Eckhart Tolleian) like moi. We are not IN THE MOMENT when we buy STUFF. If we were in the moment we would tap into real cost and buy less STUFF. Mind you I am a Director of E-Commerce so I am writing against interest here. Truth will out is my thinking (lol).
I am also an entrepreneur and capitalist who understands the primal need to feed the buy narcotic. No worries, but call it for what it is don't fall into the trap of false logic created to get you to part with money. Don't tell friends how much you "saved". No, tell your friends you don't know what you were thinking but it felt good and was fun. Feels good and fun logic always makes sense (lol).
Yes, you will buy things online. Yes you will pay A price. Understand the price you pay is not a set point but a momentary price thought. Price moves around changed by things such as how you arrived on that page (from Google, email, or a shopping engine) and what the site's pricing algorithm is feeling at that moment. The all knowing OZ who runs the site you are shopping is segmenting based on every action you take. A click here and there is all most sites need to predict (my site is not this sophisticated....yet), with some degree of certainty, what you are going to buy today (or even if you are going to buy). VALUE your most important asset - YOUR TIME and give up to the narcotic if you want. We are all addicts here (to a greater or lesser degree). Just remember to be in the moment and feel good about the decisions you make (for whatever reason). Fun and feels good are always GOOD reasons to do things, even stupid things.
Why Retail Prices Don't Exist Anymore
Why Retail Prices Don't Exist Anymore 2
Why Retail Prices Don't Exist Anymore 3
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Saturday, September 26, 2009
What You Pay