You’re being robbed!

I once heard an interview with a labor organizer who said that the three most effective words for getting people to organize were “You’re being robbed!” Why are we so compelled to believe that we’re being jerked around whenever we go shopping? Does the fact that we have access to so much free product information on the web even help? Hell no! The greaseball who wrote that marketing shit is on the take! They’ll tell you whatever you want to hear and then rob you blind. Who are you gonna trust? Some sleazy ad-writing chiseler, or me, your friend?

There’s a fascinating article on the Knowledge@Wharton site called Pricing and Fairness: Do Your Customers Assume You Are Gouging Them? The upshot is this… Yes. Your customers will always assume you are gouging them. The authors were surprised to find that it is surprisingly difficult to convince people that the market generates fair prices for most goods. For instance, the test subjects believed that profit margins for grocery stores were around 30%, whereas they are in fact between 1% and 2%. This is the kind of reasoning that makes shoplifting so eternally appealing. “Macy’s is rich… look at all this stuff! I shouldn’t have to pay for it.” But Macy’s has it easy compared to, say, Atlantic Records. When it comes to music, anything above a token amount of money is considered a rip-off. As a denizen of the software industry, I see the Napster problem headed our way. When shoplifting is easy, free of risk, and easily justified then you’re talking about a sunset industry. Do you often feel like you’re being robbed because of the prices you pay? Now you can at least take comfort in the fact that you’re not alone.

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