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Another way to think about it is offering sales, coupons, etc allow a retailer to offer a lower price floor for their goods, which expands the market for the retailer.

In other words...

Person A: Price sensitive shopper who won't pay more than $2.00 for an Avocado under any circumstance.

Person B: Convenience sensitive shopper who will pay up to $4 for an Avocado.

The grocery store can price using one of two methods... 1) offering the same price to all shoppers, or 2) offering a higher price to most shoppers so that they can offer a lower price to price sensitive shoppers (via coupons, arbitrary sale dates, etc).

With method #1, the grocery store can only sell Avocados to Person B because their prices are permanently higher than Person A is willing to pay. But with method #2, the grocery store can sell to both people because they've created a situation where a less price sensitive person subsidizes the cost of the product purchased by another more price sensitive person. The grocery store makes more money with method #2 in this example (at least hypothetically).

I think the key is realizing that people value things differently. Some people don't look at prices when they shop. Some do. Some people only shop when they think they're saving money, some don't care. Some people value convenience + time more than price, some are the reverse.

Obviously this example doesn't really apply to the first part of your comment about "Grief economy", just the 2nd part about coupons + pricing.

This concept is called 'price discrimination'. The idea is that it is most efficient for a store to charge every customer the exact amount they are willing to pay before they would decide not to buy.

Complex and systematic price discrimination is probably most easily seen in the models used to price airline tickets, which involves interesting decisions like how many seats to initially reserve for business class, then how long you wait to open them up with non-business class pricing (upgrade your seat now for only $75!).

It’s often said that no two seats on an airline have exactly the same cost.

A simple one is eBay's "Buy It Now".

I don't agree that's simple, nor (strictly) price discrimination.

The most obvious added value is faster delivery: ship today instead of in X days/weeks when the auction ends.

It also has weird value if you for some reason believe the BIN price is undervaluing the item, i.e. you can short-circuit the auction before anyone else realises.

Price discrimination can be even more flexible than that - for example someone who sells things in a flea market. The ideal seller would price their goods at exactly the highest rate each buyer is prepared to pay. They try to do this by judging if the person looks well off, or is a tourist, willingness to haggle etc.

Thank you, I hadn't seen coupons and sales in this light before. I've been thinking of them in terms of offering the same price to all customers, but this framing that takes convenience and time into account makes the whole system seem much more sensible.

>> Obviously this example doesn't really apply to the first part of your comment about "Grief economy", just the 2nd part about coupons + pricing.

> makes the whole system seem much more sensible

But doesn't it apply there too? Price discrimination has many forms, but a less pretty way of describing that one is the retailer creates non-monetary external costs and mixes them into offers, to discourage customers from simply switching to offers where less money changes hands.

Imagine instead of a "spend time clipping coupons rather than reading with your kids" proof-of-work, the retailer creates an offer which requires someone to degrade themselves, to crawl on the floor and beg, to obtain a low price. This happily permits the retailer to extend affordable service to the desperate, without more profitable customers thinking it worth switching offers! So... yay?

Issues include at least some created work functions not having inherent societal value (coupon clipping is perhaps more like bitcoin factorization than like ai-training captchas). And that created costs, and simply the customer categorization they are but one way to obtain, can have negative impacts on lives and society.

It seems economics conversations are often more explicit about value creation and flow, but less transparent about the creation of "negative value", where it ends up, and its effects. There's more involved with an avocado coupon than merely a pair of price discriminated avocado sales.

> created a situation where a less price sensitive person subsidizes the cost of the product purchased by another more price sensitive person.

Assuming 1:1 $2:$4 sales, say the cost is $1. They make $4 if they sell w/ coupon or not. The coupon chasing customer is a lower value customer because it actually takes some overhead to make coupons and to constantly convince them to be a customer. Whereas you can price at $3 and look like a champ compared to your $2 (secret coupon) /$4 (advertised price) competitors...

> Whereas you can price at $3 and look like a champ

But who thinks you look like a champ?

To Person A (the person who won't pay more than $2), they won't be a customer because you've outpriced them. To Person B (the shopper who doesn't care if they pay $3 vs. $4) you look exactly the same, because they probably put the Avocado in their cart without even checking the price.

Charging $3 dollars will mean you $2 of profit with 50% of your customers, and $0 with the rest (as they won't buy it). The coupon strategy will make you $3 with 50% and $1 with the rest. The cost of issuing the coupons themselves is small.

Not only is the coupon strategy twice as profitable for you, more customers are walking out of your store paying a price they were happy with, so you've likely got higher consumer satisfaction.

Hence why price discrimination is somewhat win-win.

I once sold a car to a man for $500 more than my initial asking price because he made me mad with ridiculous haggling.

I thought it would make him just go away. He produced the money instantly. I've always wondered about that...

I once heard a haggling tip when buying something: make an initial offer, when the seller make a counter offer, walk away. Then go back a little later and offer slightly less than your first offer. The psychological effect is to make the seller feel like he’ll either lose the deal or end up at an even lower price. It sounds like you basically used the reverse trick on this particular buyer.

as someone who also appreciates the subtle arts of haggling, you might enjoy the book Getting to Yes. It's more about negotiation than haggling but very interesting and practically useful.

Yes, this and its successor "Getting Past No" are good to understand the ways you can bend a negotiation.

>I once heard a haggling tip when buying something: make an initial offer, when the seller make a counter offer, walk away. Then go back a little later and offer slightly less than your first offer. The psychological effect is to make the seller feel like he’ll either lose the deal or end up at an even lower price.

That wouldn't work well in e.g. some chinese markets, where the vendors sell to touristy looking people for 5x or 10x the reasonable price.

So, they ask for $200, you make an initial offer of $150, they refuse, you leave, then come back and make an offer of $120. They accept it and you think you've won -- but they might have gone down to $50 too...

https://www.youtube.com/watch?v=_IJhD6D75tE

An explanation would be that your asking price was ridiculously underpriced. The man saw that and thought you are obviously clueless, maybe he can make you go even lower. After you raised the price he abandoned that strategy and just bought it.

the few times I've sold things on craigslist or whatever (I'm usually a buyer) as soon as the person has accepted my offer I'm instantly concerned that I way underpriced it and want to reneg lol.

If I'm posting something on Craigslist, I'm usually more interested in getting rid of it than getting the best price.

Yeah, that is a puzzler. According to Adam Grant, those who are intelligent negotiators don't necessarily get better short-term results for themselves, but their business partners do better, maybe because smart negotiators value the win-win for the long-term relationship.

How this other guy was so bad that it made him look smart? Wow, head scratcher. Maybe he thought "Now HERE is a good negotiator, after all my BS he raises the price". Haha.

If you just raised the price and did not tell him why, he may have thought it was a consequence of you having a stronger negotiating position, like there was another buyer, his negotiating time was limited and he should make the payment while he still had control.

Any one know what happened to Saturn's fixed price cars idea? I know the brand is gone, but not sure if its troubles had anything to do with fixed prices.

Lots of used car brands doing that now. "No Haggle Pricing"

I have noticed their prices are consistently lower than the asking price at high touch dealerships. Especially when you remove hidden feels like "Doc fee" .

I will likely buy from a place with a fair advertised price sooner than walking in at an advertised price of 125% aiming to negotiate it down to 95%.

You can also outsource it for new cars, e.g. Unhaggle.com

No idea about new cars, but Carmax is a nationwide used car dealership chain that does no-haggle pricing.

Doesn’t Tesla do that too?

Well Saturn went away around 2008 I think. But IIRC Scion had fixed prices, but then Toyota ended the Scion brand in 2016.

He needed the car, and was worried you'd go higher!

> "For example, calling Comcast to cancel. The company is paying pennies per hour to have you on hold. But its costing you your real time. Therefore comcast can easily suffer more in the process and ultimately could just wait you out..."

That's why you call them while you've got something else to do. Put them on speaker while playing a computer game, doing the laundry, or whatever else you'd prefer to be doing, as long as it's something that's easy to pause as soon as they pick up the phone.

Or better yet: do business with the company with the most responsive customer service.

It's seemingly not the case that Comcast has competitors in any given area of the U.S.

>I sometimes call it the "Grief economy" -- The entity which can suffer the most grief "wins" .

This is sadly true of human relationships as well. I've seen it phrased as "the person who cares the least in a relationship has the most power". If you are madly in love with your partner but they are slightly cooler on you, they are in a stronger position because they are more willing to risk or even break the relationship to get what they want. If you're a very clean person but your roommate is a slob, you're screwed because they're just fine with a level of mess that will quickly drive you nuts.

> a stronger position because they are more willing to risk or even break the relationship to get what they want

IMO the treatment of such power speaks volumes of a persons character and would either attract or disgust me ...

I think the implication is that this happens subconsciously, not on purpose.

In manipulation, there is a technique where if you want favour from someone, beat them to it by giving them something in advance.

This is a psychological ploy, and it doesn't even have to be all that meaningful of an item. At trade shows, it could be yet another novelty pen, an uninflated balloon with an outdated industry joke printed on it, a sticker you'll never stick, or whatever -- something they gave you, and that you will carry around. They don't give out t-shirts or cheap raffle tickets for neon pink Teslas just because they suspect you need one. They're triggering your brain into wanting to give them something in return - your time, your money, your resources. Well, inevitably it's always to eventually sell you whatever their product is, to avoid returns, and get/keep you on board.

A coupon is only one step outward from there. With a coupon, you actively "clip" it or whatever, keep it aside, carry it to the store and then cash it in. Basically a coupon is lame schwag with a hint of psychological manipulation.

If they simply docked the price by 15 cents, nobody would care and the item would probably only sell at normal volume. But on coupons, your brain has been actively trying to pay them back for the honour of having that coupon. Notice, the store honours or redeems them, but only if you hurry and do it before the deadline. You always feel like you're holding up the line and inconveniencing everyone all around for the honour of using them, yet they happily abide you. Because that was the intent all along.

Yes, I'm a couch psychologist. But on this, I don't think I'm very far off the mark.

This seems like a great way to think about this. The core reason why these kinds of patters keep popping up is that making people jump through hoops to get discounts is an effective way to price discriminate based on how much people value their time, and how much you value your time is going to have a very strong correlation with how much you're possibly willing to pay.

I think the fixes for this are largely going to be cultural. For example something that could help is everyone having more pride and simply refusing to jump through pointless hoops for a discount (even if it is technically worth their time).

Would be interesting to have a web shop with a repeatable "Solve this captcha for an X% chance of decreasing your price by $0.YY", where it doesn't let you go past a price floor and X and Y decreases as price approaches floor. Discount expires in an hour or few.

Ideally, you'd use a functional captcha, but even without, it seems it would be as useful to society as most current price discrimination techniques.

I'd imagine people would be much more likely to make a purchase if they have already invested 20 minutes solving captchas to save a few bucks.

Some sites have a "spin to get a discount" feature. I would imagine you can just enter new email addresses until you get the max discount.

> The best customer is one that comes in and says "I want this item, I will pay a reasonable price right now and walk out a happy customer"

These customers are not price sensitive. So you do not want to give them the best deal. Instead the profit maximizing technique is to find customer who won’t pay your “reasonable price” but will pay some smaller amount. You make them jump through hoops so you don’t cannibalize your “reasonable customer” sales.

When done right every customer is paying what they consider “reasonable”. For some that is more money than others.

Maybe. I just spent a month trying to buy (not all of that time, obviously) two articles of clothing. I had fairly specific criteria ( black, hoodie + joggers, zipper on hoodie, thick and soft material on both), which most stores could not fulfil.

It was strange. Major sportswear brands make the items I want. I have the money. I'm willing to pay, frankly, much more than the product is worth for most people. But the issue seems to be, somehow, retailers do not stock enough of the kinds of things I want that I could actually buy them.

IOW, the maths of supply and demand seems to be a bit more complicated than one might expect.

But why waste everyone's time with all that noise?

The scarcity of the coupon diminishes the discount and wastes real people's lives on triviality.

I'd rather maximize profit by delivering more to my customers, not by extracting more for the same.

What do you do once you're a mature, commoditized company with no room left to innovate? Maybe you wouldn't try to milk your customers for as much as they're worth, but you'll eventually retire sell your company to the highest bidder, who probably will.

This is exactly why consumers need ways to subvert and compete with markets beyond just making individual purchasing decisions. Without a continual pressure in the opposite direction, markets will eventually optimize to be the most exploitative version of themselves that they can be.

When people look at capitalism as a competitive system between multiple businesses, they're looking at an incomplete, broken system. Capitalism should be seen as a competitive system between (at least) businesses and consumers.

Open Source is one way that consumers are able to place competitive pressure on the software industry without starting their own businesses. Open Source products are available for free, often developed at a loss, and they subvert the expectation that software features have to be profitable to exist. Businesses are forced to compete with free, which forces them to implement consumer-friendly features that wouldn't otherwise be profitable.

Adblocking is another important force dictating online content rules -- it allows customers to directly reject a business model, by subverting the idea that profitable content can be forcibly bundled with unprofitable content. Then you have more grey-market pressures like piracy, which forces companies to compete on delivery mechanisms and not just on content.

This kind of subversion helps commoditize content, making it difficult for industries to monetize products that they'd otherwise tightly control. Industries describe this as a bad thing -- if a business model isn't profitable and if creators aren't making money, then something's wrong. But this is consumers doing what they're supposed to do. It is good for consumers to compete by circumventing business models.

In this case, what we'd like to see is consumers colluding to share coupons and deals, so everyone can get the best price. We want to force sellers to negotiate with consumers as a single group, not with each individual person. To a certain extent, we are seeing this, which is why you see certain businesses getting more aggressive about hiding their charges and making coupons harder to share.

Coupons are typically for low-margin goods, such as groceries. There's not much "more" to deliver. And companies do it because they tend to get more profit than if they didn't do it.

There's tons more to deliver and companies are innovating in the space. For example those prepared dinners you still cook fresh, impossibly meatless meat, delivery instead of shop yourself, direct farm to consumer (powered by ecommerce)

Which are all luxury upsells on life-ncessary goods, that the 90% of the population can't, or doesn't want to waste money on.

Coupons and similar time-wasters optimize the revenue that you get from that 90%.

That's a different product than a can of corn, which you can sometimes find a coupon for.

Though I've never seen a coupon for say, a fresh head of broccoli.

Except that some like me will just not bother buying from you at all.

If done right you won’t even know its happening. The best companies setup entirely different brands to segment the market.

Joel Spolsky had written few years ago about why companies do this: https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-...

>I've long been thinking about this topic. I sometimes call it the "Grief economy" -- The entity which can suffer the most grief "wins" . For example, calling Comcast to cancel. The company is paying pennies per hour to have you on hold. But its costing you your real time. Therefore comcast can easily suffer more in the process and ultimately could just wait you out...

Nothing that a law that every businesses should have a one click cancel process you can easily and immediately use when you want to, can't fix...