Thursday, April 19, 2018

Wither the Price Tag?

Planet Money ran a story about the price tag a few years ago. The premise of the story is that the price tag emerged in just the 1870s and may be on its way out. So how did you know what to pay previously?
You know, for almost all of the history of human commerce - for thousands of years - you walk into a store, and you point to something. And you say, how much does that cost? The guy at the store is going to say, how much you got? You know, everything was a negotiation.

Price tags saved transactions costs but removed the ability to price discriminate. There is a nice discussion of how price tags lowered the skill level required by clerks, and hence labor costs. But now we are in the era of online 'personalized pricing,' a constant price on a tag seems to be on the way out. But we are still working out the rules.
And there is this broader sense, I think, that right now, you know, we're still trying to figure out the rules of this new pricing universe we're in. There is one thing the people clearly don't like, that clearly at least so far is against the rules. And that is when a company charges different customers different prices at the same moment. 

Perhaps this is a quibble, but the point of price tags was to minimize the costs of haggling. The new pricing mechanisms typically do not invite haggling back.

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