Soap Box: Retail Pricing

Come and listen to my story about a man named Jed
A poor mountaineer, barely kept his family fed…

That’s exactly how I feel when it comes to retail pricing, and it’s getting worse. I’ll share some examples and I’ll include my evolved philosophy and procedures.

Example #1: I recently ordered some printer ink from Amazon. It was on back-order, but they said it’d be just a week, so no big deal. The price was $42. Remember that, it will be relevant as we go further. As the week is winding to an end I get another email saying it’d be another month. Ummmm, no.

So, I ventured down to my popular big-box retailer and they don’t even carry my brand of printer ink. Next I mosey on to my local brick-and-mortar office supply store. Go in, a guy asks if he can help me, so I hand him my empty box and say, “I need this.”

He finds it and goes to hand it to me, and I stop in my tracks. I said, “No offense intended, but I can’t buy it at that price.” He says ok, puts it back on the shelf and I leave.

The were charging SEVENTY-SEVEN DOLLARS for the same thing I could get at Amazon for $42. 83% higher! And they wonder why online retailers are kicking their butts.

Now, granted Amazon had it on back-order, but I wasn’t out so my situation wasn’t critical. I get back on Amazon, find it through a third party on Amazon, in stock, for… get this… $40 and free shipping (and no sales tax!). It won’t be two-day Prime, but it has already shipped this morning, two days after I ordered it. It will arrive soon.

Example #2: I have a couple friends who work for a local photo store. They often say that people don’t understand the value they provide. They often say that people will regret the day when there are no brick-and-mortar retailers from which to shop. And you know what… I agree with them. I completely agree with them. There is great value in what they provide that goes beyond the simple buying of products.

I know people who think nothing of going into a store, comparison shop, consume the salesperson’s time, then go home and buy it cheaper from an online retailer. Those people suck. They have no intention whatsoever of purchasing from the local retailer. They’re just selfish and rude. Those people suck.

If I go to a store, and let’s say I’m shopping for a new camera lens, I will ALWAYS give that store first shot at the sale. Always. I am also willing to pay a reasonable amount extra to buy from them. 1) I want a vibrant local economy, 2) I value the service that they just provided, 3) When I establish a relationship I can go in and talk with a friend in a no pressure and no expectation scenario, and that has value as well, and 4) I want a place where I can comparison shop brands and models in the future.

So, as I said, I always give them first shot. But… there’s always a ‘but’, isn’t there?… but, I am not a lottery winner. I don’t have a deep bank account. I am not Mr Moneybags. I have to look out for myself at the same time, and ensure my own financial well-being. I am willing to pay a bit extra for local and for service, but I am not willing to drain my bank account to do so. The retailer still needs to respect me and be competitive.

I’m not saying they have to beat, or even match, the online retailer’s price, but they do have to be reasonably close. How close varies with many factors, but my general rule of thumb is in the 5% to 10%-ish range (less on very expensive items). If Amazon is charging $750 for a camera lens, I will pay around $775 to $800 from my local retailer, and I will do so gladly. I refuse to pay anyone $900 for a $750 lens, regardless who it is.

Example #3: We have a local regional grocery store chain that is, overall, pretty good in selection and quality. I would prefer to shop there exclusively instead of the big-box retailer, but I can’t. They’re simply too freakin’ expensive. On average, according to a couple price check surveys of my own that I have done (yes, I really have), they’re about 30% higher than the big-box guys. Again, at some point it is too much, it is price gouging, and I have to look out for myself, too.

Their big slogan/jingle is about having “a friendly smile is every aisle”… note the rhyme, lol. Nothing about price (except the odd good sale), nothing even about value, just how friendly they are. Spare me <insert eye roll here>. Just know that any business that goes out of it’s way to avoid telling you how competitive they are are doing so because they aren’t competitive at all, and they know it.

Example #4: Soft drink prices in restaurants have gotten completely absurd. Most places are trying to be as competitive as possible on their food, I get that, but they don’t want it to cut into their profits, so they’re making up for it on the drinks.

I have a great deal amount of restaurant experience, including ownership for a short time, albeit many years ago. Soft drinks have always been a high-profit item, but now it’s ridiculous. A glass of soda costs the restaurant, maybe, 20c. Maybe. I’m now commonly seeing prices of $3 (ok, $2.99). This means that for my wife and I to have a refreshing soda with our meal, up to $6 gets added to our bill, and unlimited refills go only so far. And to be even more insidious about it, many restaurants are taking drink prices off their menus so people don’t go into sticker shock when they see it. They’ll still list the flavors, of course, but no prices.

My counter-measure to this is that I now always ask the server how much soft drinks cost. I have set my own admittedly arbitrary limit… $2.29, which is still very generous… and if they answer with anything higher I reflexively say I’ll have ice water… which I should be doing more anyway, but I digress.

I have had one server laugh and say she understood. Many servers look disappointed, or even annoyed, because $6 less on the bill affects their tip. Well, sorry, talk to your boss. We’re back to where I have to protect myself and my own bank account.

Example #5:  Raising the price without raising the price.  You’ve seen it.  A product gets smaller, but the price stays the same.  And of course the package never points this out to you, though they do label size/weight per law, so *IF* you’re paying attention you’ll notice, but if you aren’t, well… you know.

Breyer’s Ice Cream went from 2 qts, to 1,8 qts, to 1.75 qts, to 1.5 qts over a period of just a few years.  Many kinds of orange juice are no longer 64 oz, but 59 oz.  The dog food we buy used to come in 40 lb bags, and is now in 30 lb bags.  And I could go on and on and on.  You get the idea.

I have read instances where companies are claiming they are only reacting to people’s desires for less portions, etc.  Ok, but if that were the case then the price would go down with the packaging.  It doesn’t, does it?  Let’s be honest and call it what it is… raising the price without raising the price.

Conclusion… finally, eh?: That’s it. And to think I started with two examples in mind, and it snowballed from there.  Anyway, you have to be on-guard. You have to protect yourself. No one cares more about you and your well-being than you.

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