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The BBC is Not Always Rubbish

Monday, April 10, 2017 3:45
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(Before It's News)

Contentious sentiment, huh?  But, just once in a while …

Here’s an interesting BBC article on a good Capitalist topic: ‘two-part pricing‘ – the sale of (e.g.) below-cost printers to hook you on their overpriced ink: a phenomenon that sometimes makes one grind the teeth.  Rent-seeking; they’re all at it.

Anyhow this Beeb writer attributes it to Mr Gillette and his razor-blades.  (Did giving kerosene lamps to eskimos** post-date this?)  It’s all a bit entry-level, but he goes on to discuss the dynamics of two-part pricing more generally:  locking the customer in via patents on the refills, or technology for the same effect – those bastard chip-readers that prevent you from using a knock-off.  (The software in my printer is yet more subversive than that: but I’m even smarter still …).

Also discussed are the psychological factors which is where it gets really interesting, for economists as much as psychologists.  “Two-part pricing can be highly inefficient, and economists have puzzled over why consumers stand for it. The most plausible explanation is that they get confused.”  Well, maybe.  But yes: teaser-rates, free trials, ‘customer loyalty’, inertia in general – all phenomena worth recognising.  And the really serious matter of barriers to exit / barriers to switching:  hey, I spent some time in the enterprise software business and believe me, the thought of switching out of a big, more-or-less reliable piece of enterprise s/w is enough to make most companies stay rooted to the spot in a cold sweat, long after they should have jumped ship.

Good old Beeb, eh?   (*ducks*)

ND  

 ________
** am I allowed to say that?  or should it be native Inuit-type Canadian indigenous peoples



Source: http://www.cityunslicker.co.uk/2017/04/the-bbc-is-not-always-rubbish.html

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