Fair Pricing - A Thing Of The Past

Living paycheck to paycheck has never been more real. If you are like me (your basic average dude) you've been struggling to make ends meet for a long time. Part of the problem is that wages have gone down but we have more things to pay for these days (cell phone subscriptions, internet subscriptions, virus software subscriptions, subscriptions of all sorts) and the prices for all those things are just barely in reach. That is no accident.

I'm going to use my cell phone provider as an example: there is no doubt in my mind that Sprint would make a very good profit if all of their plans were $50 or less. But most of their pricing is at least double that sometimes triple -and now they don't even allow negotiation. You can also bet that Microsoft would have still made a huge fortune if their Windows products would have been priced at even $25 per computer. But they charge $200 instead. How do they get away with it?

In the past most businesses tried to determine what was a fair price for their goods or services. Most used a markup percentage over the cost of manufacturing, R&D and marketing. These companies made a good profit and most people could afford their products and services and still have a little discretionary spending for a vacation or a college education.

Today we have a different pricing structure. Modern pricing is based on what companies determine is the maximum price a typical customer will be able to bear for their products and services. They use the process of Data Mining to determine how much typical families make, what they spend on other things and how much they might have left. They then set the price based on what they determine is the maximum that the customer could pay. I wrote a 3 part article a while back on how they gather all this information - most of the time without you ever knowing about it.

This type of pricing has increased profits for companies many times over. At the same time it has obviously diminished any disposable income you may have had in the past. These companies don't believe you should have disposable income - anything you have left should be spent on their products. It is little wonder then that most of us struggle to get by.

But wait - there is still more........

Companies know that people who are broke will work harder to make money to pay for these goods and services. They can get by with fewer workers - often at lower wages - and still get the same productivity because they know people who are struggling will work extra hard to keep their job - no matter what. Corporations do not care about the stress level of their employees - that's why it is very easy to eliminate jobs when profits fall - even for a short while. Their overall operating costs drop as productivity increases (along with your stress level) and their prices rise to keep the cycle going.

Modern pricing structures are a win-win for corporations and a lose-lose for consumers. The situation looks hopeless but it is not. If corporations did not have access to every piece of personal information about you, they wouldn't be able to determine how much you can bear to pay. What we need are strict limits on how much data can be collected and used by corporations. You do that with your vote in local and national elections. Our political parties are very divided right now between those that support business (Republican) and those that support people (Democrats).

I once told a friend of mine (who I know reads this blog) that I really didn't care what information was being collected about me - after all, I have nothing to hide. I had no idea how conniving corporations would become in order to drain me of every last dime. Now I know and I'm spreading the word. I hope you will too.