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The BBC is Not Always Rubbish
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
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** 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
