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Comment by losttheplot | Hacker News Reader

Why is it that almost every company that provides a service with the potential to be in perpetuity, like insurance, always fee creep their customers to the point that you switch because you know you're being fucked compared to what the market "intro rate" for new customers is? You switch only to be back what you were paying before the switch after three months or another time lapse.

When there are few providers in any market, they are colluding to fuck consumers, that are forced into a musical chairs game for little savings.

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I like to think of this as "attention arbitrage".

Bank fees are a good example. To you and I, an extra $3 bank fee is annoying but not worth allocating enough of our attention to avoid it. We aren't in the business of spending our whole damn day minimizing random bank fees.

But bank administrators are in that business. They spend their whole day trying to figure out how to maximize thieir profit and when they roll out a fee they can apply to millions of customers. There are enough customers hit by this they could summon enough total attention to push back, but the attention is divided among all those people and easily conquered. Meanwhile, the bank's effort to apply that fee is concentrated among a small number of people whose very job it is to do stuff like this.

So banks and other businesses discover cases like this where the quantity of attention they are willing to devote to something is larger than what any individual customer is, and that's where they squeeze.

Because someone ran an analysis that says you can make $X more by doing one thing that doesn't cost you anything. Many companies just look at the numbers and say "sounds good."

It helps that since they are insurers, they know how make this analysis with a large degree of confidence.

I imagine it's because these are almost always public companies that need to show earnings growth. They are always trying to improve margins and their stock price. That's much easier than actually figuring out a great marketing plan to acquire new customers. And also far cheaper, too.

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