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Not sure if this belongs here or in the business section. Also, I apologize if this has been discussed before. If so, kindly direct me to the appropriate discussion(s).
Anyway my question is a three parrter.
1. Is buyers psychology. This is most visible with the airlines but other business are catching onto this too.
For instance....airline A is charging $300 for a flight between here and there. It's an all inclusive tariff that includes taxes, assigned seats, baggage, and a meal. Airline B is charging $150 for the same flight, same route, same type of plane, etc. But piles on the charges a-la carte piecemeal: $150 for base fare plus $150 in accessorial charges. Sometimes the add-on charges can actually exceed the cost of the all inclusive fare. Yet no one buys it.
This tactic has been PROVEN to work. My question is WHY does it work?
2. Why, after doing that, do these people complain each and every single time about getting nickel and dimed? And yet they keep doing it.
3. What has fundamentally changed in the human psyche recently that allowed this to happen? This kind of business model was absolutely unheard of as recently as the turn of the Century. Up until then, everything was "what you see is what you get". What we call a-la carte pricing today, in 1999 would have been called "bait-and-switch".
Humans are not the same creatures they were even fifteen years ago when it comes to cognition. If time travel was possible, someone instantly transported in time from 1998 to today would be unable to function. And vice versa if we could instantly go back. What changed?
I knew a lady who did not have enough money to pay her water bill each month (which was $40). And every day she would go to the convenience store and buy a soda pop for her and her kid. She would say "It is only a dollar!"
That is a dollar for her and a dollar for her kid which equals $60 a month.
When I advised her to cut out the daily soda pops to save the money to pay for her water bill, she did not "get it". "It is just a dollar!"...
"Our triumph has also been made easier because, in our relations with the people necessary to us, we have always played upon the most sensitive strings of the human mind -- on calculation, greed, and the insatiable material desires of men. Each of these human weaknesses, taken separately, is capable of paralyzing initiative and placing the will of the people at the disposal of the purchaser of their activities."
Protocol 1.
How many years now have children graduated from high school with no mathematical ability? They are allowed to use a calculator in math classes and can't see even a very serius math error just by looking at it because they don't have a clue about what the answer should look like.
On that airfare thing, the airlines go to some serious lengths to hide the true cost of flying. It takes some real digging to figure out what your final bill will be. That's a little more complicated than thinking $3.99 is a bargain and $4 isn't.
I can see where someone who doesn't fly might not know that they will pay an additional $200 when they reach the airport. It's not listed there with the airfare.
Because I travel with dogs, I have to add up all the charges and, believe me, the information isn't always easy to find.
On the soda instead of paying the water bill, I suspect that a small percentage of the population is mathematically and financially dyslexic. I know that my little sister is. It doesn't matter how much she tries, how often it is explained, she is incapable of understanding how money and credit cards work. It's some sort of brain defect.
Isn't it possible there are people who do know the accessory charges, but are able to avoid them? I always fly Southwest because they have no baggage charges, however I also know people, especially guys, who can get away with only a small carry on under their seat (which is usually no charge) and don't care which seat they get. For those people, the $150 fare can remain close to that, while for me it would end up much more expensive.
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