| "Price gouging" is an emotional,
| |
| | exploiting the citizens. Nobody seems to
|
| inflammatory term. Everyone is against
| |
| | think to blame the use of a list
|
| it, but only buyers, angry over excessive
| |
| | price.List prices are some of the best
|
| profit-taking, proclaim it. As a seller,
| |
| | fiction ever written.Should We Sell Over
|
| how can you reap the profit rewards you
| |
| | List?Some routinely call the selling of a
|
| deserve without being accused of price
| |
| | product at more than list price
|
| gouging?From a marketer's perspective,
| |
| | "gouging," and consider it unethical and
|
| attaching a price tag to a product or
| |
| | even immoral.Buyers feel gouged when it
|
| service is always an agonizing
| |
| | appears that sellers are taking advantage
|
| experience. What is the right price? This
| |
| | of the buyer's condition with a commodity
|
| question is hotly debated in meeting
| |
| | product. I'll loosely define commodity as
|
| rooms around the world every day. The
| |
| | any product or service that has a fairly
|
| search for the perfect price may be the
| |
| | consistent price in most selling
|
| Holy Grail of marketing.Pricing is like
| |
| | environments. When the buyer sees an
|
| sunblock. No matter how you decide to
| |
| | inflated price for the commodity and has
|
| apply it, the question always lingers;
| |
| | no other competitive alternatives due to
|
| how much is enough? How can you avoid
| |
| | the situation they're in, the buyer feels
|
| leaving money on the table without being
| |
| | gouged.For example, I would expect a hot
|
| burned by claims of price gouging?While
| |
| | dog and a Coke at most locations to be 4
|
| everyone certainly wants win-win
| |
| | or 5 US dollars. When I was watching the
|
| relationships, the buyer and seller are
| |
| | Atlanta Braves play baseball at Turner
|
| adversaries where pricing is concerned.
| |
| | Field and got hungry, the hot dog and
|
| The seller wants to get the most money
| |
| | Coke I found cost closer to $10. To find
|
| possible for their offering, because each
| |
| | any food that I considered reasonably
|
| additional dollar gained is pure profit.
| |
| | priced, I would have to leave the stadium
|
| From the buyer's perspective, less is
| |
| | environment. I felt gouged.As a boater, I
|
| better and free is best.The List Price
| |
| | routinely pay 30-40% more at the dock for
|
| ObstacleMost claims of price gouging are
| |
| | a gallon of gas than I would when I take
|
| based on comparisons of asking price to
| |
| | my car to the pumps. Same gas, different
|
| published list price. From the buyer's
| |
| | environment. I feel gouged.Price gouging
|
| perspective, list price is the ceiling,
| |
| | occurs when no alternatives are available
|
| the most they should have to pay for a
| |
| | for purchase. In our free market society,
|
| seller's offering. More importantly, list
| |
| | that rarely happens. When it does, we
|
| price becomes the basis from which
| |
| | need to be especially careful. Where
|
| discounts are taken.The idea of
| |
| | there is demand, there is usually -- but
|
| establishing a list price for a product
| |
| | not always -- competition.A Controversial
|
| is actually a fairly new invention. As
| |
| | SolutionAn opportunistic sales force that
|
| recent as the middle Middle agesAges,
| |
| | I once worked with faced a pricing
|
| prices were based on perceived ability to
| |
| | dilemma. Buyers in this industry
|
| pay versus being tied to some intrinsic
| |
| | routinely expected a 15-20% discount,
|
| worth of the product itself. For example,
| |
| | making it nearly impossible to hold list
|
| when a nobleman was purchasing a
| |
| | price. The solution came to be known as
|
| commodity such as food, they would
| |
| | "New York Pricing" -- invented by the New
|
| routinely pay several multiples over what
| |
| | York district office -- which simply
|
| a peasant farmer would pay for the same
| |
| | involved marking up list price by 15%
|
| product. Why? Because they could. The
| |
| | before presenting it to the prospective
|
| seller would have no trouble asking the
| |
| | buyer. After ardent negotiations, the
|
| nobleman for the higher price, and the
| |
| | buyer might receive their 15-20%
|
| nobleman would have no problem paying. In
| |
| | discount, resulting in a sale at or near
|
| those days, gouging only referred to
| |
| | list price for company. Because
|
| activities having to do with battles and
| |
| | headquarters couldn't come up with a
|
| body parts.For most of us, we believe
| |
| | better solution, "New York Pricing" was
|
| prices can only go down from list price.
| |
| | widely practiced by the sales team
|
| When buying a car, for example, nobody
| |
| | although not officially endorsed by
|
| expects to pay "sticker". In fact, many
| |
| | management.Gouging is in the Eye of the
|
| car buyers believe that list price
| |
| | BeholderWhile we might like the market to
|
| shouldn't be the basis of pricing
| |
| | set the price, we can't all engage in an
|
| discussions at all. Instead, they focus
| |
| | auction environment. At some point during
|
| on working from the dealer's invoice
| |
| | a buyer-seller interaction, the seller is
|
| price. How shocked these same buyers are
| |
| | going to offer a price. This is perceived
|
| when they're asked to pay over sticker!
| |
| | by the buyer as list price, and we expect
|
| This has happened when anticipation for a
| |
| | to go down from there.Price gouging is
|
| new model creates high demand though the
| |
| | not about charging more than list price.
|
| product is in short supply. Examples
| |
| | It's about the seller taking advantage of
|
| include the original releases of the
| |
| | the environment to require people to pay
|
| Mazda Miata, Dodge Viper, Nissan Xterra,
| |
| | more than the offering is worth. Selling
|
| the reintroduced Volkswagen Beetle, and
| |
| | over list price is fine if the market is
|
| the 2005 Mustang.When sellers ask for
| |
| | willing to bid up the price despite the
|
| more than list price, buyers deem it
| |
| | presence of alternatives. That's what
|
| "unfair", "outrageous" and -- of course
| |
| | happens with hot new cars. If the buyer
|
| --price gouging. Now it's time to play
| |
| | believes they are getting value well in
|
| the blame game. We can blame
| |
| | excess of the list price, both parties
|
| manufacturing for not producing enough
| |
| | can feel good about the transaction.©
|
| vehicles to meet demand. We can blame
| |
| | 2005 Paul Johnson. All rights
|
| marketing for creating too much interest
| |
| | reserved.Note: This article is available
|
| in a product they couldn't supply. We
| |
| | for reprint at no charge.
|
| can blame the greedy capitalists who are
| |
| |
|
