Last week, Steve and I went to the mall to shop for some “new job” clothes — 3 white button down shirts and a new commuting messenger bag for his history books. We wandered into the Fossil store and he found one that he liked. It cost around $140. Not a cheap bag, but he gets one every three years, and he uses it every day.
We thanked the sales dude and said we would come back, after we looked around a little more.
Then we went into Macy’s and found the identical messenger bag. The bag was the same price in Macy’s – $140. But we have a Macy’s credit card and get coupons in the mail every month. At the cash register, I pulled out my 20% off card and paid $112. We saved $28 dollars.
$112 was the real price of the bag. $140 was the sucker price. Most people on line had their coupons in hand. But there’s always one guy who doesn’t. That one shopper who didn’t have the coupon paid a $28 tax on that item. Stores are getting rich by taking advantage of the uninformed shoppers.
Is this ethical?
Apt. 11d 
Is this ethical?
I don’t know, but I can’t stand it. I started shopping at JCPenneys during their short-lived no-sale experiment. I thought it was a fantastic breath of fresh air that made shopping less miserable. The experiment of course bombed, and they’ve had to go back to coupons, fake sales, and everything else that makes shopping horrible.
The economic justification for why it could be ethical is price discrimination. Basically, you allow people who have greater price sensitivity to substitute time (scrounging for coupons) for money. If they couldn’t do so, then the price would probably be higher and some of those “price sensitive” (likely poorer) consumers wouldn’t be able to buy it at all.
But I just hate it. Hate the feeling of having to “haggle”. Hate the feeling that I’m always somehow being cheated. I’d be delighted if we as a society got rid of credit card points, rewards programs, store credit cards, bogus sales, and all just went to paying a real price that was transparent and that everyone knew. But most people I think would disagree with me. They like the rush of getting something “cheap”. Ugh.
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I consider myself pretty frugal but I’m also often willing to pay the sucker price so that I don’t have to deal with coupons or special credit cards or membership clubs. I’d rather pay more for less stuff than have to deal with those beshitted key tag things.
This is how the airline pricing works and I don’t think it is particularly unethical.
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Or, what Chris said more eloquently.
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Absolutely it is ethical. A retailer can choose to charge what it wants. To whom it wants. By which I mean, it can charge different prices to different people (such as people who search for coupons), as long as it is not violating discrimination laws. If you do not like that, shop somewhere else. Moreover, you do not have enough information to even know how the difference between the Macy*s and Fossil overheads affects their pricing. It is possible that Macy*s makes more money (even considering the coupon) than Fossil, because Fossil may have higher rent, may not be able to get the price for the same price from the manufacturer as Macy*s did, may have a different compensation structure for its staff. If it turned out that Fossil’s profit on the bag was less than Macy*s, would it be ethical for Macy*s to sell it with a coupon price that was greater than the price charged without a coupon elsewhere in the mall?
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You are experiencing a failure of research, which negatively affects your conclusions. Fossil is a brand; the brand has some stores but also distributes its branded merchandise through other retail outlets. The price Macy’s pays is to Fossil, not the manufacturer. The difference is completely that Macy’s can accept a lower profit margin because it’s selling a wider variety of merchandise, and more of it, than the branded Fossil store; Fossil is already making something on the Macy’s sale (because it sold the wholesale merchandise to Macy’s).
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These are very good points. Upon reflection, I’ll also add that I did not really understand whether the question was asking whether it was ethical for Fossil store to sell the bag at the sucker’s price or whether it was whether it was ethical for Macy*s to be nearly simultaneously charging its customers the sucker’s price and the perceived true price (which, as another commenter pointed out, is also a sucker’s price when compared with online pricing). Now that I think about it, I suspect she was only referring to the two Macy*s prices.
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I don’t know — I just feel like a bag lady when I go shopping, because for me the only way to remember all those discount coupons is just to throw them all in my purse whenever I get them and then go rooting through them like a squirrel at the cash register.
I also wonder if it doesn’t privilege really tech-savvy people who all appear to have utilities on their smart phones that track that stuff for them.
I think everybody’s circle of friends probably includes that one (usually Asian) lady who has made shopping an art form — who figures out how to take her family to Europe with frequent flier miles, who always has the coupon for the pizza. Our particular Asian lady has probably saved a fortune over the years — but she’s just really smart and really organized. I would kill to be that lady, but I’m not sure how you get there.
I’m the one who buys the Groupons, forgets to use them, and lets them expire (or finds out that the ice cream coupon doesn’t work at the nearby ice cream shop, but only the one across town, etc.)
There’s a lady in my office who can figure out which hotel you actually want in DC and then buy it on hotwire using some arcane system of clues that she appears to have mastered — me, I always think it’s probably the Ritz that’s downtown, and find out that actually it’s the Holiday Inn in Arlington.
I think there’s probably some other form of intelligence (in addition to social intelligence) that’s at play here — and I clearly don’t have it.
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I have a bigger problem with hospitals charging one price to people who have health insurance (the coupon clippers) and another price to those without health insurance (the true suckers). But I’m not even prepared to say that such a practice is unethical. I’d like to see the government use its public-policy powers to legislate and regulate that type of practice out of existence, as it relates to healthcare. As you can see, the government is trying to remedy this problem (by reducing the number of people without health insurance and thus subject to gouging), but there has beeen, to put it lightly, some pushback on these efforts. As a general matter, I’m less bothered by department store price discrimination than I am by health care price discrimination.
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Of course it’s ethical — even a fundamental tenet of capitalism. Of course, it’s also perfectly ethical for people to refuse to use coupons, and only shop at places that don’t try to play price discrimination rules (though this probably means paying higher prices). Now I thought your article was going to be about price discrimination in medical care, where I would be a bit more sympathetic on a variety of different grounds (including peoples lack of knowledge in comparison shopping, emergency situations — no one has a Fossil bag emergency, and difficulty in assessing quality of care).
I have come to understand that I am behaviorally a sucker for discounts. Not in a good way (i.e. I’m not the discriminating shopper who manages to get more value for my money). Instead, I’m the sucker who buys things that I don’t really need because there are big flashing signs that say that I’m getting a $200 bag for $100. I’ve become more organized about using coupons (mostly ’cause I can use them in online shopping).
Paper coupons don’t work for me, and I’ve come to recognize that I’m going to pay a premium for that lack of skill in managing paper. I just threw away a $20 off coupon for Office Depot. I can buy my printer ink there, and buy it regularly, so if I’d been a bit more organized (the coupon expired yesterday) I wouldn’t have basically thrown away $20 this morning. Maybe I’ll be disciplined and try to remember to buy the ink the next time I get a coupon.
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“I have come to understand that I am behaviorally a sucker for discounts.”
Exactly. A number of years ago, when I first got personal finance religion, I swore off “saving” money. I used to prowl the sales rack at BabyGap all the time. I don’t do that any more. I budget X dollars for clothes and shoes every month, and when the money’s gone, I stop. I can’t afford to “save” all that money I used to.
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PS: I love Fossil bags.
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I cross-posted with ML on the health care price discrimination issue. Some of those stories are wild (like the NJ hospital that has made expensive boutique emergency rooms in order to take advantage of a NJ law that requires insurers to pay for the emergency room choices of their clients). That’s an interesting story because it’s a battle between to big corporate entities that increases the cost of medical care.
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it’s a question of profit, not of ethics.. in any case you could have paid $90 at Zappos,
http://www.zappos.com/fossil-estate-e-w-city-bag-dark-brown?ef_id=UkrqSAAAAfQG-s-3:20131001152912:s&zfcTest=fac%3A1
Or go to the source and pay $10 plus $35 shipping from China,
http://www.ebay.com/itm/Mens-Vintage-Canvas-Leather-School-Military-Shoulder-Bag-Messenger-coffee-C020/310759546496?_trksid=p2047675.m1985&_trkparms=aid%3D444000%26algo%3DSOI.CURRENT%26ao%3D1%26asc%3D17515%26meid%3D1678319983137763053%26pid%3D100012%26prg%3D8141%26rk%3D3%26rkt%3D5%26sd%3D310759536836%26
All the prices are sucker’s prices, it is still a cheap Chinese-made bag with markups set only by what the market will bear. Markets don’t have ethics, just information asymmetry..
http://en.wikipedia.org/wiki/The_Market_for_Lemons
this is the same trouble I have with buying new cars.. opaque pricing, and all the prices are sucker’s prices, there is no way to leave the dealership except miserably. So I have never bought a new car, just can’t stand the haggling. The only used car I’ve had problems with came from a dealership, odd that.
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But the pricing of used cars is even more opaque and subject to hassling than it is for new cars. At least, that’s been my experience. It may be hard to compare what two dealers want for a 2014 Accord with the same features, but for used cars, it’s basically impossible to get an exact comparison. Plus, unless you’re a mechanic, you are operating on the wrong side of a big information disparity.
I don’t like buying cars either, but the only solution I’ve found is to never replace a car until it’s all rust and tree-shaped deodorizers.
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in the old days when cars weren’t mostly software, I could inspect a car and figure out if there was anything badly wrong. Also character counts 😉 always bought from folks selling from their homes, any sense of shadiness just means a simple walk away from the deal. That’s worked well for basically all the cars I ever bought, except the late-model used car from a dealership..
The last 3 cars have all gone more than a quarter million miles.. minivan is now at 240k, have to buy something soon, feeling sick already.. ha.
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Ditto on hatred of shitty keytag cards. Solution: scan them all into phone – lots of apps for this. Most of loyalty programs now have options to load coupons on to your card number via the web. Viola – no more carrying a janitor size key ring or having reams of coupons in your bag. PITA, but better than paying full price. My sister (who is not Asian) is one of those super coupon ladies. Now that’s she’s not working, I am a bit afraid of where she is going to go with this – I keep saying she’s one bad life event away from becoming a hoarder. Regardless of whether we think it’s ethical or not (I do), it’s not going away, so we all need to figure out ways to deal…
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The way a lot of Quakers got rich, in 17- and 18-c England, is that they believed there was a real price, which was their cost of materials plus a fair price for their labor. So you could send your kid, or your maid, or your aged ma, to buy stuff. And they would get the same price as your sharp-bargainer self. Cut a huge amount off the transaction cost.
Zappos is doing some of the same stuff, but they have to look over their shoulders at Internet lower-pricers lapping at their heels.
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I’m a little puzzled. If you get what you want at a price you are happy with, what do you care what other people paid? I’m pretty sure that Laura would be the first to say that the significance of your (heterosexual) marriage is not affected by whether gay people get married, or that if you don’t approve of abortion, you should not have one, so why doesn’t the same principle apply here?
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^This^. Should Aldi’s have to charge the same price as Wegman’s? Should stores never be allowed to run sales at the end of a season? Or, is it only something that requires a small effort on someone’s part (coupons) that you object to?
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Because you’re always left thinking did I negotiate correctly? Could I have done better?
I’m an economics professor, I know all about consumer surplus and differential willingness to pay. (Although there are models out there which say coupons are bad for customers). But the constant feeling that if I just spent my life lurking on slickdeals that I could get steals is irritating and a real utility cost, even if I don’t think there’s a public policy implication. America turning into a “haggling” culture strikes me as a negative, and frankly the whole enterprise is aesthetically unappealing. It’s cheap feeling and grubby. I like going into Walmart and paying low prices that are transparent and equal, not wasting effort scrounging around for 2% off or, God forbid, haggling over a price.
Incidentally, bargaining/negotiating/haggling seems to be worse for women and minorities, at least in the automotive market:
http://www.theatlantic.com/business/archive/2013/06/the-price-is-racist-when-minorities-and-women-are-asked-to-pay-more/277174/
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Was it on this blog that someone posted being asked to make an offer at some big box store (like K Mart?). Does K Mart still exist?
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Yes, bj, there is a K Mart. It exists as certainly as dubiously maintained retail spaces and minimum wage jobs and poor taste exist, and you know that they abound and give to your life its highest annoyance.
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I understand a distaste for haggling, (I don’t share it, but I get it). I don’t get the distaste for coupons or that there might have been a slightly better deal. If you think scrounging for 2% on $140 dollars is a waste, then don’t do it. Why does it bother you so much? I am really puzzled by this.
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If you think scrounging for 2% on $140 dollars is a waste, then don’t do it. Why does it bother you so much?
I have a nearly pathological aversion to social waste. I’m personally affronted when I see long lines at the DMV or traffic congestion. Time spent clipping coupons is time you’re not working or spending with friends or whatever. And I understand the consumer welfare benefits (price discrimination), but the actual act of clipping coupons is mostly wasteful. Yes, it segments the market, but at a cost of performing a fairly useless activity.
But admittedly, it’s somewhat irrational and aesthetic (and I’m not making a policy argument). I just don’t like a scrounger society. It’s undignified. And part of it is I know I’m not a terribly savvy consumer, and I rely on price signals, and don’t like those signals to be noisy. Also, I get absolutely zero pleasure out of scoring a deal, so the flip side “benefits” of opaque pricing are not important to me. And also, I tend to prefer simpler “rules” in society to complicated ones. I don’t like rewards programs which act as transfers to smarter people. They have enough advantages already without getting an extra 2% cash back or whatever that someone with less understanding of the banking system (who is likely to be poorer) isn’t getting.
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You’re only a “sucker” if you buy something that you don’t need, no matter how discounted it is. If you need “it” and it’s good quality for how you will use it, then it’s worth it.
All those discounts and reward plans and coupons thrive on the impulse buy.
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Yes! Within reason.
There are so many hoarders who are out there scoring “deals” on stuff that is just going to rot in their homes.
It’s not cheap if you don’t need it.
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The discounts definitely do. If you’ve ever wondered who it is that clicks on the 40% off banners and buys things, that’s me. It’s a vice that I can afford, though, so I’m OK with it.
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I’m usually pretty “strong” but DID impulse buy a leather jacket of all things that I’ll now be consigning. Only human…
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Well, presumably the disutility that some derive from knowing that other people are having gay marriages and abortions counts as a “real” utility cost, although I don’t usually see it mentioned in utilitarian literature.
Interestingly, the discounts don’t affect me at all. The knowledge that I could have saved $28 by shopping around means nothing to me. My calculation on these matters is purely financial and I value my time at more than $28 for the time interval that I would have spent shopping around.
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Sure it’s a cost. Doesn’t mean you have to worry about it in policy or anything. But of course social conservatives are harmed by living in a society that doesn’t reflect their values. So be it. (And I’m not a utilitarian, so I don’t much care.)
I freely admit my preferences are not the norm here. God knows why, but some people seem to like the idea that they need to keep a constant eye out for sales, so they can find the day that socks are on a 6 for 1 sale at Mens’ Warehouse and pick them up on the cheap or else pay three times what they otherwise could have. Me, I’d be delighted to be able to think “I’d like some socks today”, go to buy some socks, and buy them at a normal, non-crazy, and standard-ish price that the market has presumably set through some competitive process. But if more people thought like me, JCPenneys’ experiment wouldn’t have failed, so I’m just going to have to suck it up. Or else do my shopping on amazon, which doesn’t seem to have this problem. There’s an appealing thought.
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“amazon, which doesn’t seem to have this problem. There’s an appealing thought.”
Amazon has never made a profit, but the stock market keeps funding it. They have pricing algorithms which ensure their prices are always a buck or so less than anywhere else, which they can do since they don’t need to make a profit. Their evasion of state taxes has provided an enormous advantage over local retailers. Their behaviour as corporate citizen is more like a slave-owner, so I have stopped buying from them..
Powell’s books are always a dollar or two more than the same book from Amazon (even used books), but I’ll happily pay that dollar to fund actual jobs with benefits for the (unionized) Powell’s workers.
http://tomslee.net/2012/01/2012-predictions-turning-points-for-the-web.html#sec-4
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It’s not the same as the dis-utility of other people engaging in behavior I disapprove of (say, people eat mushrooms)– because how much someone else pays for something — say for example tuition for college or for a seat on a plane influences how much I will have to pay for it. That may not be true for an infinitely available good (like an ebook), but I think it’s true for any resource we pay for collectively (college, airplane rides, hotel rooms, . . . .).
I’m sure there’s better economic analysis and some theories might argue that the fact that someone else paid less won’t be influenced by how much someone else is willing to pay. But I disagree with those analyses and cite the Cameron analysis on taxi car drivers, who, economically illogically, work fewer hours when fares are easier to find, because they stop working when they’ve reached a strike amount for the day, rather than working more when an hours work will earn them more money (i.e. rainy days).
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“Or else do my shopping on amazon, which doesn’t seem to have this problem. ”
Yes they do — they just adjust the prices without sales. I don’t think they adjust prices differently for different customers (though they could), so it’s not the same as sales. But they do vary the price of items, I think potentially as often as hourly, so one could get different pricing on Amazon by following these trends over time. I’ve had a few items in my “shopping cart” vary in price as by as much as $100.
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Fair point. I think they do adjust a little based on individuals, or at least what kind of computer they were using (that might be a different company I’m thinking of though).
But running small microexperiments or changing prices here and there based on demand doesn’t bother me nearly as much as getting to the register and hearing: “So this was on 2 for 1, plus an additional 20% off for coming in on the first full moon that the Jupiter was in Aquarius, and then […]” Even something like Uber’s demand-based pricing doesn’t bother me, because I understand where prices are coming from.
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I feel as though I’m experiencing a tremendous amount of disutility when I contemplate having to pay the ‘sucker price’ for college. I’m particularly irked that we are not eligible for discounts because I have always worked, while my neighbor who honestly watches soap operas on TV all day while her husband works probably will get a discount for college. Regardless of what I end up paying, it will irk me that she pays less. And that she talks about the Kardashians all the time . . .
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You’re over-complicating life. You don’t actually know that she’ll get a discount for college and talking about the Kardashians is more than enough reason to be irked at somebody.
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So it is really about wanting to punish someone else. You think she is not ‘deserving’ in some way. How is that any different than Reagan’s old welfare queen argument?
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I also wouldn’t count on them figuring out the discounts for college. She’s watching the Kardashians, not hanging out at College Confidential. That makes her less competition, not more.
With your profession, you should be able to game the college system to a tee. You should be able to wring the last available dollar out of the college financial system for the benefit of your offspring.
Go, Louisa!
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