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Comment by dreamcompiler | Hacker News Reader

There seems to be a perception in big companies that if you're not pissing off your customers enough to drive them away, you're leaving money on the table. So there's this constant pseudo-optimizer running to get the maximum profit possible.

Thank you Harvard Business School.

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For another example of the same behaviour, watch the development of Sports in European cable - Viaplay for example. Starting 2016 the headlines of the press has been "Viaplay chockhöjer priserna" ( Viaplay shockingly raise their prices ) They have now jacked up their prices to a level where customers are now not only leaving(1), but actively hating the company online(2 - see comments), as well as teaching friends about pirate IPTV alternatives. At the same time the management of Viaplay have raised their compensation levels to ridiculous levels. The company itself is suffering financially from all this, but management is richer and fatter than ever before(3).

1. https://teknikveckan.se/det-krisar-hos-viaplay-over-25-proce...

2. See comments - https://twitter.com/ViaplaySportSE/status/180153322166384670...

3. https://omni.se/sparkade-vdn-jobbade-fem-manader-far-18-milj...

The same thing happend with Netflix raising prices. Probably everyone nobody canceled their subscription after the increased price just becouse it’s not worth the effort. And the price raise is incremental just so nobody will complain.

Boiling the frog, so to speak

Turns out frogs are smarter than we thought

https://web.archive.org/web/20240118204920/https://www.fastc...

That story actually came about from a scientist doing experiments on frogs. Frogs with removed brains. Arguably the frogs are not smarter than we thought

See https://en.m.wikipedia.org/wiki/Boiling_frog under the Experiments header.

I canceled my subscription when I found out they wanted me to buy two subscriptions -- one for each home I own.

Not really gonna cry for somebody that owns two houses.

Where I live Viaplay bought the licenses for showing football matches on all levels for the next years. Previously we could see the football WC and European championships, and national games on the national tv channel. With the new viaplay deal the games would only be possible to see on their platform or whatever it is.

Fortunately they fell into financial troubles before the deal became active.

They massively overpaid for showing all of the matches, to force everyone interested in football to get a subscription. But probably most people just watch it on tv, because "hey, why not, national team of x country (or our own team, for whom winning a match is a miracle) is playing, lets watch it". Not "I will happily pay tens of € each month to some company to watch stuff".

At a certain size company, you being a professional asshole is a requirement for any position. Also being very good at lying and deceiving. The danger begins when those people start believing their own lies.

When aggressive, deceitful behavior becomes normalized...

I once read that business is the art of ripping someone off without pissing them off.

For better or worse, I agree. If you aren't ripping them off you're leaving money on the table, but if you go too far and piss them off they're going to take away all the money on the table with them.

Well you can piss people off in some ways, yet in other ways give them value.

> If you aren't ripping them off you're leaving money on the table

You're leaving money in their pocket that you might get later

How do you quantify loyalty? Because it seems to me that it's very easy for individuals to prioritise short term gains at the cost of medium and long term losses due to trust erosion

I wonder how much client satisfaction and trust would be worth on the quarterly report, if it could be calculated. I think it would be immense for most companies

Money in their pocket is not money on the table. You are in fact reinforcing my point: Client loyalty and trust is critical in business, you're a lousy businessman if you've damaged that by ripping off your clients too hard angering them.

The most effective business is getting all the money on the table and making your client happy. Thusly the art of business, ripping off your client without pissing them off.

Absolutely nobody gets ahead in business by selling wares cheaper than what they could have gone for, unless you are deliberately underselling the market to gain share by sheer force of will. Likewise by selling wares higher than what they could have gone for, clients will just look elsewhere because you're just another one of many merchants.

> Absolutely nobody gets ahead in business by selling wares cheaper than what they could have gone for, ...

Explain Costco then.

Volume. Its all relative to your less efficient competitor

Didn't Costco get volume by selling things cheaper then they could have?

They also have less items for sale so each sells more.

People with Costco memberships view shopping as a sport. Instead of golfing, they go buy shit and eat hot dogs.

They do have the best hot dogs.

Where both shopping and golf are about getting a low score ;)

Costco makes the majority of profit from membership fees, they've already profited from you before you have even made your first purchase. Arguable any profit they make from what you purchase is where you are being 'ripped off' but because the savings and return policies are better than the competition they avoid the 'pissing off'.

Isn’t a membership like $35 a year?

$60 or $120

Are you sure about that? Their average markup is around 10%, so that would mean that the average member would be spending $600 or less in the store per year.

https://www.forbes.com/sites/shelleykohan/2023/10/24/costco-...

I've seen the same numbers in multiple articles state that 72% of Costco's profits came from the membership fee in a year that they saw record sales.

As an upside, once you’ve pissed off enough customers, you can also quit and provide them with an alternative that packages an open source tool with some enterprise features with marginally better terms

Yeah, it feels like I saw an example somewhere

Indeed, businesses can maximize profits by pushing the limits of customer tolerance. And I see that often now

It's important to recognize that the only thing that matters is how big of a bag you can get. Making money is the only point of tech. Get in, get your bag, and get out!

I've seen business cases predicting 70% churn that were entertained for months because of the revenue potential.

Reminds me of the "men only want one thing and it's disgusting" meme but with executives.

"We can cut costs if we sell to a few whales and not a broad audience"

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