“If you have to ask…” is a phrase you may have heard before, once or twice, in conjunction with the price of some luxury item or service (the implication being: “you can’t afford it!”). Perhaps you’ve heard or said it inside a boutique store, where no price tags are present. For a silly example, perhaps you’ve noticed that many restaurants don’t list the price of alcohol on their menus. The internet is supposed to spur open competition and a free market for the retailing of goods. However, minimum price laws force many companies to keep the prices of good and services secret until an item is already in an online shopping cart.
Resale Price Maintenance
Welcome to the world of resale price maintenance, a practice where manufacturers of goods set a price floor on their products. Thanks to a 2007 Supreme Court ruling in Leegin Creative Leather Products v. PSKS, Inc., retailers have to follow some minimum guidelines in order to set prices for online goods. In fact, it is a result of this behavior that leads companies to only show the price of a product inside of shopping carts. This has the added benefit (for the manufacturer) of keeping the lower prices in the blanked out internet storefronts form showing up on shopping aggregation sites like Google Shopping.
- If You Have to Ask… (Paul Stevenson)
Yes, it’s possible that if you have to ask you can afford a product. The real tragedy, of course, is the lack of information. However, is it all bad? Take this Wharton article on the subject, which brings up an interesting point: will minimum price floors encourage more stores to compete based on the services they can offer their customers? Does this matter? This was the point that Leegin made in the Supreme Court case. But isn’t this already a consideration when you shop online? With sites like Reseller Ratings and warranty pages at online retail sites, you already have the information necessary to figure out which retailers offer the best service (and services…).
The Supreme Court ruling allows the manufacturers to set a price floor on their products. This allows them to set a certain image for their brand. However, the information asymmetry which comes about from blocking aggregation site attempts to collect this data seems bad for consumers. It means your retail searches will go on a little longer as you have to add items to your shopping cart to find out their true cost. How does this affect you? Do you find more companies offering value propositions other than price? I’m interested in your comments!
Mall thumbnail sourced from http://www.flickr.com/photos/53496815@N00/4138684969, shot by Paul Stevenson.
Popularity: unranked [?]
Interested in what you see? Click here to subscribe to Don't Quit Your Day Job...Related Posts