Let He Who Reveals his True Final Cost Cast the First Stone

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Vikram Bath

Vikram Bath is the pseudonym of a former business school professor living in the United States with his wife, daughter, and dog. (Dog pictured.) His current interests include amateur philosophy of science, business, and economics. Tweet at him at @vikrambath1.

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107 Responses

  1. Avatar Froggy
    Ignored
    says:

    It’s easier for airlines, though, because the regional taxes (i.e., state, local) are pretty much known. If Orbitz wanted to include hotels, cars, etc., they’d need to incorporate local taxing structures across the country, which seems unwieldy. Not saying it can’t be done, but just that it is a whole lot more complicated, no?Report

  2. Avatar Gabriel Conroy
    Ignored
    says:

    I can’t say I’ve ever thought about this before, and I’m not sure what I’d think of a law requiring all businesses to disclose taxes.

    I suppose this reflects my privilege. I’m not super-rich and I have to watch my budget. But I almost always have enough money in my pocket to give me enough leeway when I make purchases and know I can cover the tax spread, whatever that is. I imagine if my situation required more penny-pinching, the issue might seem (to me) more pressing.Report

    • Avatar Vikram Bath in reply to Gabriel Conroy
      Ignored
      says:

      I’m similarly situated, thankfully. In fact, I find myself walking away from the checkout having already committed the transaction and realize that I have little idea of how much I actually paid because it so rarely matters.

      But, yeah, “privilege” is the right word for that.Report

  3. Avatar Brandon Berg
    Ignored
    says:

    I think it’s a good thing for people to be reminded how much government is costing. I’d like income tax withholding to be a bit more in-your-face, too.Report

    • Avatar Vikram Bath in reply to Brandon Berg
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      says:

      I used to feel more that way. Less so now because
      1. There are other ways to do it. Why not display prices both before and after rather than just the former?
      2. You know that dream that people like you and I have of people seeing what such things really cost and rebelling against it so as to lead to a more compact and efficient government? I think we need to admit that this particular approach is not working and we need a new strategy.
      3. As mentioned in the post, it’s not really the cost of government anyway. They are just the particular costs that happen to apply to get this kind of treatment.Report

      • Avatar Damon in reply to Vikram Bath
        Ignored
        says:

        @Brandon Berg @vikram-bath

        You want to be sucessful in showing people how much gov’t costs? End income tax withholding completely. April 15, you write a check. That’ll start something.Report

      • Avatar Reformed Republican in reply to Vikram Bath
        Ignored
        says:

        @damon
        Yes, it will be a lot of unpaid taxes, because people would not save enough money for their taxes. Of course, a lot of people that get excited because tax time = refund would be shocked to realize how much they are actually paying every year.Report

      • Avatar morat20 in reply to Vikram Bath
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        says:

        Yes. Specifically it will start people saying “Bring back withholding, it worked better”.Report

      • Avatar morat20 in reply to Vikram Bath
        Ignored
        says:

        Just in case it was unclear: It would be taxpayers saying that, because withholding was much more effective in covering their tax bill than trying to save up and paying it all at once.

        Nobody likes paying taxes, anymore than they like having root canals. But by and large, Americans seem to grasp that they’re necessary things.

        Despite about 30 years of “Cut taxes and we can spend more” rhetoric, which is a lovely thing to believe — very compelling (who wouldn’t want to spend less and get more?) but I don’t think anyone buys that anymore, and it turns out people get really, really upset when you start trying to cut the expensive parts of government.

        Like Social Security, or the FDA or whatnot. (And it turns out you can’t cut the cheap stuff enough to make a difference in people’s taxes — NASA is a rounding error in the Defense Department’s budget, and of course cutting Defense is treason).Report

      • Avatar morat20 in reply to Vikram Bath
        Ignored
        says:

        Of course, a lot of people that get excited because tax time = refund would be shocked to realize how much they are actually paying every year.

        It’s written right there on your form. In black and white. You have to do the math. Well, the website does the math these days, but it’s still there — to the penny. Heck, they’ll even throw in an actual % of your income to boot. For free even.

        If you don’t know, to the penny, wait you paid in taxes last year — then you’re a man who didn’t file his tax return.Report

      • Avatar Damon in reply to Vikram Bath
        Ignored
        says:

        @morat20

        Indeed. If you spread the pork widely enough, you prevent any measurable reductions as too many people’s ox is getting gored. Smart plan ain’t it?Report

    • Avatar j r in reply to Brandon Berg
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      says:

      I’m not sure that would work out the way that you want it to work out. If people saw how much the government was costing us, it’s more likely that they would demand more from the government. And that, in turn, would end up costing us more.Report

  4. Avatar Will Truman
    Ignored
    says:

    I support such regulations for those areas with unusually higher or unpredictable taxes and fees. I think we’re fine on the sales tax. The OP makes a good point about the irregularity with which items can be subject to the sales tax, though for me that’s an argument in favor of just making it across the board.

    Plus, the accumulation of pennies in no-sales-tax states is more aggravating than having costs tacked on above the posted price.Report

    • Avatar Vikram Bath in reply to Will Truman
      Ignored
      says:

      Applying the sales tax across the board would then allow you to figure out prices *with* a calculator and a particular knowledge of the local sales tax rate, which is never posted.

      You’re still left with the fundamental bizarreness of the price on a good not being the price you must pay. In fact, it would extend this problem to *all* goods.Report

      • Avatar Will Truman in reply to Vikram Bath
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        says:

        You only need a calculator if you can’t mentally calculate 7%! It teaches math! (I’m only partly saying that jokingly.) I figured it out when I was a kid with very specific amounts of money in my pocket. I don’t think it’s too unreasonable. The key, to me, is consistency. That’s where things with specific taxes run astray, and why it makes sense to force a degree of pricing transparency on those products specifically. Especially things like hotels, where the taxes can vary from one locale to the next depending on what sporting stadia they needed to finance.Report

      • Avatar Vikram Bath in reply to Vikram Bath
        Ignored
        says:

        According to taxrates.com,

        The California (CA) state sales tax rate is currently 6.5%. However, California adds a mandatory local rate of 1% that increases the total state sales and use tax base to 7.5%. Depending on local municipalities, the total tax rate can be as high at 10.0%.

        State and local taxes can reach 9.25% in many cities. Food and prescription drugs are exempt from sales tax.

        Maybe you can multiple by .07 in your head, but 6.5% or 9.25% is a whole other level of problem for mental arithmetic. I’m not saying that it can’t be done, but I think it’s fair to say that it is onerous even for those who can do it reliably. And you still haven’t explained why there isn’t a need for a sign to disclose that the calculation is needed in the first place.

        The key, to me, is consistency.

        Well, yes. Because you’ve decided to adjust to it. So as long as you are being deceived consistently, you won’t notice it and will even defend your being deceived on a blog in your free time. That doesn’t actually make it OK though anymore so than anyone else who is wronged but wronged consistentlyReport

      • Avatar Will Truman in reply to Vikram Bath
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        says:

        In my perfect world, sales taxes would be for states and would be statewide.

        You should know that as a kid I used to calculate 8.25%!Report

      • Avatar Michael Cain in reply to Vikram Bath
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        says:

        In my perfect world, sales taxes would be for states and would be statewide.

        Given that sales taxes are the only form of income tax allowed to most local governments [1], this would force them to depend entirely on the combination of (a) property (ie, wealth) taxes and (b) state largesse and priorities. Property taxes have their own set of problems that lead to oddball policies: California’s Prop 13 and Colorado’s Gallagher amendment, for example. Both were/are intended to deal with the problem that over sufficient time, many elderly people’s homes become a store of wealth far out of line with their income. As for routing revenues for local services through the state government… you lived in Idaho; how well would the local governments — particularly the rural local governments — take having their funding (and attendant strings on the money) all flowing through the state government?

        [1] Yes, it’s a consumption tax, but in most places consumption and income are quite well correlated.Report

      • Avatar Will Truman in reply to Vikram Bath
        Ignored
        says:

        Every form of tax has its problems, to be sure. A lot of them, like Prop 13, are self-inflicted, though. Idaho… is a hard state, generally. Montana, meanwhile, gets by with almost no sales tax at all. Texas is almost there (keeping in mind, I’m talking about forms of taxation as opposed to tax rates).

        I don’t object to locations getting money through sales tax or stipulations saying that collections are direct pass-through (the state collects, but bounces the money directly back to counties with no strings attached).

        Politicians would no doubt screw it up, of course, they always do. But my general preference is income to federal (and to states where required), sales to state, and property to local.Report

    • Avatar Brandon Berg in reply to Will Truman
      Ignored
      says:

      Plus, the accumulation of pennies in no-sales-tax states is more aggravating than having costs tacked on above the posted price.

      I never have more than four pennies in my pocket. If I have four pennies and the total is $23.99, I pay $24.04 and get a nickel back.

      Oh. Nickelback. Yeah, I see the problem now.Report

    • Avatar Kim in reply to Will Truman
      Ignored
      says:

      Sales Taxing across the board is hideously regressive.
      PA ain’t perfect, but “no tax on food and clothing” seems like a good plan.
      (note: PA’s taxes on clothes are confusing and weird. Most clothes are covered,
      but I’m not certain if brassieres are — and wedding dresses are certainly not).Report

  5. Avatar Kazzy
    Ignored
    says:

    I agree that mandates around transparency and accuracy in pricing should be extended.

    I’d also outlaw the practice of not listing prices. Some fancy, shmancy bars and restaurants will give you a drink menu with no prices. You order a beer. You get a bill for $12. I think the consumer should have every right to say, “I never agreed to pay $12 for this beer.”Report

    • Avatar Jaybird in reply to Kazzy
      Ignored
      says:

      I was told, when I was a very young man, if you go into a restaurant where the prices are not on the menu, be sure to have brought a credit card because you won’t believe how expensive it is.Report

      • Avatar Saul DeGraw in reply to Jaybird
        Ignored
        says:

        The general rule I’ve heard is that if you have to ask for the price, you probably can’t afford it.

        This is not always true of course.

        The only times I see a price not listed at restaurants is for when something is a seasonable item and then they say M.P. or Market Price.

        Even restaurants that are tasting menu only usually have the price at the bottom.Report

      • Avatar Kazzy in reply to Jaybird
        Ignored
        says:

        I understand how this all works in practice.

        But if I say, “I’ll have a Bud Light,” and neither party makes any attempt to establish what I will exchange for that Bud Light, why does the business get to decide that unilaterally after the fact?Report

      • Avatar veronica dire in reply to Jaybird
        Ignored
        says:

        A lot of high-end, designer shops do this. Personally, I think it’s just a kind of affectation, a “look how classy this all is; we don’t even list the price.”

        I mean, if you ask, they’ll tell you the price. It’s not really a big deal. Plus if you’re in the market for that stuff you probably already know what to expect.

        Anyway, I think it’s an ambiance thing.Report

      • Avatar Reformed Republican in reply to Jaybird
        Ignored
        says:

        But if I say, “I’ll have a Bud Light,” and neither party makes any attempt to establish what I will exchange for that Bud Light, why does the business get to decide that unilaterally after the fact?

        They did not decide unilaterally after the fact. The price was determined in advance, but you chose to agree to it without finding out what it is.Report

      • Avatar Kim in reply to Jaybird
        Ignored
        says:

        Saul,
        you don’t go to places that serve beer?
        Nobody lists beer prices on the menu.
        http://www.ds6pax.com/beer/draft-list/Report

    • Avatar Vikram Bath in reply to Kazzy
      Ignored
      says:

      I don’t like not seeing disclosed prices before ordering either. Though, it’s interesting to observe that at least they aren’t displaying a price that is lower than what you will eventually need to pay.Report

      • Avatar Kazzy in reply to Vikram Bath
        Ignored
        says:

        What really gets me is if/when they then give attitude when you do ask. I get that they have no moral, ethical, or legal obligation to not do so. But when they seem reluctant to give the information, they seem to be saying, “The gig is up; if people knew the real prices, we’d be screwed.” It moves the tactic away from ambiance and into outright deception.

        If they offer the price up happily, at least we aren’t starting the interaction off on a negative note.Report

      • Avatar veronica dire in reply to Vikram Bath
        Ignored
        says:

        @kazzy — Yeah, I think this drifts out from the “fair price” space into the “shitty service” space, where yeah you get to vote with your feet.Report

      • Avatar Kazzy in reply to Vikram Bath
        Ignored
        says:

        @veronica-dire
        Oh, I do. Believe me, I do.

        By the way, did a bit of wandering around the W. Village this weekend. Thought of you. 🙂Report

      • Avatar Vikram Bath in reply to Vikram Bath
        Ignored
        says:

        This study got a lot of press recently: http://www.sciencedaily.com/releases/2014/04/140429085627.htm
        “[C]onsumers who get the brush-off at a high-end retailer can become more willing to purchase and wear pricey togs.”

        “Participants who expressed an aspiration to be associated with high-end brands also reported an increased desire to own the luxury products after being treated poorly.
        The effect only held true if the salesperson appeared to be an authentic representative of the brand. If they did not fit the part, the consumer was turned off. Further, researchers found that sales staff rudeness did not improve impressions of mass-market brands.”Report

      • Avatar veronica dire in reply to Vikram Bath
        Ignored
        says:

        It’s kinda sad, but probably true. There is status in shopping at these brands, and maybe (to some degree) an incentive to require customers to “earn” the status.

        But there is another side, of course: the guesswork by the salesperson regarding who is likely to spend and thus who is worth their time. You can expect high-end salespersons to know the major status markers and be able to judge this stuff quickly. (Which carries all kinds of messed up racist stuff when they fail to recognize Oprah Winfrey or someone like that.)Report

      • Avatar Vikram Bath in reply to Vikram Bath
        Ignored
        says:

        I’ve seen in person way too many people get taken in by that stuff. And it often includes people like my father overpaying for crap so as to “show” the salesperson that they can afford it. It’s exactly the right trick to employ on someone who is insecure about how others might perceive their financial status, so it works really well on members of communities that might be thought of as poor on first glance.

        I always try to recognize it happening and then go out of my way to agree with the salesperson that I probably can’t afford it. Because I’m not going to give them a fishing sale as a reward for trying to make me feel bad.Report

      • Avatar DavidTC in reply to Vikram Bath
        Ignored
        says:

        @vikram-bath
        I always try to recognize it happening and then go out of my way to agree with the salesperson that I probably can’t afford it.

        The most fun I have ever had interacting with a cashier is via agreeing with them:

        Best Buy used to be the only moderately close electronic store. In case you don’t know, they like to pressure people into buying completely overpriced extended warranties. (On top of their idiotically overpriced stuff.) I hated it, and they’d always lie to try to sell their warranties.

        But then a Fry’s opened up nearby, and I started going there, and I thought I’d even look back.

        So one day a few years ago I needed something, I think it was a nice-ish set of headphones, or something like that. Something that normally would be thirty dollars, and Best Buy would be selling for $45. and I happened to be right at the mall with the Best Buy.

        And I just couldn’t resist. I’d actually talked about doing it before, but never hard. But I couldn’t resist. I knew what was going to happen, and if it didn’t, I’d take my lumps, but the headphones, and just pay the extra money.

        But it happened. They tried to sell me an extended warranty. They even used the same script as last time, how their mother had bought one of them and they had to get it replaced. (Last time it had been their grandmother.)

        I gasped in horror, looked at them, and said ‘You mean you’re selling stuff that breaks? And you know it?’ really loudly.

        Then I walked out, just leaving the headphones at the cashier.

        So much fun.Report

      • Avatar Gabriel Conroy in reply to Vikram Bath
        Ignored
        says:

        @davidtc

        Yeah, it’s really fun to get back at a company by taking a swipe in at its low waged service employees for doing their job.Report

      • Avatar DavidTC in reply to Vikram Bath
        Ignored
        says:

        Ah, yes, I can’t even count the ways in that I harmed that man.

        Because those ways are, in fact, zero, as I didn’t harm him at all.

        Despite the fact he was actually telling me a lie intending to cause me to pay him money, aka, committing what was morally, if not legally, fraud.

        That’s right, everyone. Be sure to be polite to people attempting to defraud you, or you’ll get sneered at on the internet.Report

      • Avatar Gabriel Conroy in reply to Vikram Bath
        Ignored
        says:

        I guess my snarky quip deserved that response, but here’s how I look at it. Service workers usually get paid some low rate. If not minimum, then it’s still something really low. And their managers usually require them to read the scripts, etc., that you’re talking about. It’s vexing to have to deal with the micro-agressions from customers. Now, that worker survived and wasn’t really hurt all that much, I’ll stipulate. If that worker was indeed fabricating a story about his or her grandmother, then, yeah, he or she shouldn’t have done that. It’s also a different story if the cashier gets a commission, and for all I know maybe he/she does (or maybe by selling 10 warranties, e.g., he or she gets some sort of small bonus).

        Now, morally are you in the right? Maybe, supposing certain things (like the lying and the commission). Still, at a certain point, the cashier is just doing his/her job. (Cue in Godwin-esque references to “you know who else was just doing their jobs.”)

        If I’m hypersensitive about such matters, than I’m just hypersensitive and I guess I’ll have to leave it at that. In fact, there’s probably not much of an “if” about it….how service workers are treated is just one of the things I sometimes overreact to, and I tend to take the service worker’s side even when the worker might be in the wrong.Report

  6. Avatar Jim Heffman
    Ignored
    says:

    It’s not the company’s fault that you’re butthurt about how you fell for their advertising scheme. If you don’t like the final price then you’re certainly welcome to not pay it, and to not receive the good or service.Report

    • Avatar Kazzy in reply to Jim Heffman
      Ignored
      says:

      Part of the difficulty is that — in some circumstances — the good or service is provided before the final price is revealed.Report

      • Avatar veronica dire in reply to Kazzy
        Ignored
        says:

        What annoys me was signing up for a phone plan, since it took literally hours of shitty paperwork and whatever before they’re ready to bill your credit card, at which point you discover they’ve been lying the whole time.

        Yeah, I can walk out and go down the street and be treated exactly the same way, all the while mumbling “Wow, ain’t the free market great!”

        Or else we can pass laws saying, “Tell us the fucking straight-up price when we ask.”Report

      • Avatar Patrick in reply to Kazzy
        Ignored
        says:

        I think the right way to do it is to bill companies for the time I have to spend to determine whether or not I want their product. It’s a market-based solution!Report

    • Avatar DavidTC in reply to Jim Heffman
      Ignored
      says:

      It’s not the company’s fault that you’re butthurt about how you fell for their advertising scheme.

      You realize how crazy that statement is, right?

      It actually is the company’s fault that you fell for their advertising scheme. Considering, you know, they’re the ones who did it.

      ‘It’s not Fred’s fault you’re upset because he deliberately ran over you with his car’.

      Yes. Yes, it is Fred’s fault. Or, rather, it’s Fred’s fault you were ran over, and being upset is a perfectly expected reaction to that.

      You want to assert that their advertising scheme is legal, fine. That means they’re not legally ‘at fault’ that someone fell for their advertising scheme. They didn’t commit a tort, and can’t be sued for it.

      But it still is, in English, the company’s ‘fault’. The company caused their advertising scheme to happen. It is something that happened due to the company’s actions. It is the fault of the company.Report

  7. Avatar FredW
    Ignored
    says:

    I haven’t seen the actual wording but if it is truly just “taxes” — that is money paid to a government entity it would be one thing. But airlines have all kind of “fees” that are display in the “taxes and fees” section that are just money to the airline (“fuel surcharges”, “origination fees”, etc. etc).

    Of course rental car companies are notorious for this as well — many of those “taxes and fees” are just charges the rental company keeps but they give them a official sounding title and we pay them.Report

  8. Avatar Matty
    Ignored
    says:

    Why do this? I mean I suppose it makes things look cheaper but that’s only going to work once per customer and then people will just get annoyed because they don’t know what the price of things is just what the number on the front says.Report

    • Avatar Brandon Berg in reply to Matty
      Ignored
      says:

      When and how it got started, I don’t know. But once it’s the norm, it’s difficult to deviate from. If people expect that the price they will actually pay is 20% greater than the list price, and you actually list the final price, then they’ll assume that your final price is 20% higher than it actually is. People aren’t going to reliably remember which companies list the final price and which don’t, so it’s better to be in a position where their confusion works to your advantage than in a position where it works against you.Report

  9. Avatar Matty
    Ignored
    says:

    I once came across the following claim, which may or may not be true. Shops are under no obligation to sell to you at the price on the label.

    The argument went like this, if they are obligated then you have a binding contract – the label is the offer, you taking it to the till is acceptance. That means if they don’t want to sell the display item and have none in stock, or this one is faulty or any of a thousand other problems you could technically sue for breach of contract.

    So instead you make the offer by taking an item to the till and handing over your money but they don’t have to accept.Report

    • Avatar Brandon Berg in reply to Matty
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      says:

      I’m about as certain as a non-lawyer can be that this is correct. Even if you could sue for failure to honor a price tag, the damages would be trivial.Report

    • Avatar Saul DeGraw in reply to Matty
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      says:

      You can always negotiate/haggle if you know how to. Some tips:

      1. It is probably easier to negotiate at independently owned shops/boutiques than it is at any chain/department/brand name store because the independently owned shop/boutique is probably not bound by corporate rules and can often be staffed by the owner or managers with the power to negotiate. Smaller chains might also have the power to give out special privileges to loyal customers. I know I’ve gotten cash back instead of store credit from these situations on return goods for being a regular.

      2. It helps to be a regular/loyal customer. There are stores that seem to give automatic discounts to loyal customers. Again these are independent stores where you can get to know the owners on an almost personal basis.

      3. The Manufactured Suggested Retail Price is exactly what is. I’ve discovered that there is some regional variation but not by much especially in more upscale purchases/bright. A shirt might cost 190 dollars in Madison but 210 dollars in San Francisco/New York. I don’t know for sure but I imagine there is more of a tight margin for the price of books than the price of clothing in the MSRP.Report

    • Avatar Saul DeGraw in reply to Matty
      Ignored
      says:

      http://en.wikipedia.org/wiki/United_States_v._Colgate_%26_Co.

      The law is a bit more complicated.

      Resale price maintenance is generally illegal but a manufacturer does have the right to set terms with whom they sell products to.

      So Fancy Shirt Co wants their shirts to retail for 200 dollars. Al’s Discount Fashion sells the shirt for 150. Fancy Shirt Co can refuse to sell their wares to Al’s Discount Fashion.

      Now some buyers like big department stores probably have more negotiating power than independent boutiques of course because of economies of scale and all that.Report

    • Avatar Mike Schilling in reply to Matty
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      says:

      There’s also no obligation to sell at the advertised price. For one thing, it could be a mistake that was never caught, as could a label, or for that matter the salary expectation on your job application (“Sorry to hear you inadvertently left out a zero, but you did make a legally binding offer to take the job at $10K/year.” Nope.)

      Though not doing either of these makes a bad enough impression that often the sale is made (even at a loss ) anyway, to avoid ugly publicity.Report

      • Avatar Michael Cain in reply to Mike Schilling
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        says:

        Since you’re a California boy, from the California Business and Professions Code, 12024.2: “It is unlawful for any person, at the time of sale of a commodity, to… Charge an amount greater than the price… advertised, posted, marked, displayed, or quoted for that commodity.” Overcharging by more than a dollar can be punished by up to a year in county jail, although I expect that’s seldom used.

        My time as a state legislative staffer taught me to never make assertions until after I’d read the statutes.Report

      • Avatar Mike Schilling in reply to Mike Schilling
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        says:

        Interesting. I know I’ve read about cases where an ad was published with mistaken and ridiculously low prices, and the company had the choice of whether to honor them. Not in California, perhaps.Report

      • Avatar Brandon Berg in reply to Mike Schilling
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        says:

        That seems ambiguous. It doesn’t actually say you’re compelled to make the sale, so presumably you could simply refuse to sell it at the advertised price. Could you then offer to sell it at a different price? And what exactly is a commodity?Report

      • Avatar Michael Cain in reply to Mike Schilling
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        says:

        I suspect honest mistakes get a pass in California. This is not a consumer recourse law to guarantee the customer gets the (possibly erroneous) posted price, it’s the state fining/imprisoning people. Failure to honor the ad with the missing zero may be a technical violation, but the DA or AG is going to decide whether to prosecute. Certainly if I’m a DA, I’m not going to pursue a one-time ad error. I’m going to use the law to go after people who use bait-and-switch as a routine business practice.

        Nevertheless, California businesses have a legal obligation to honor the posted prices, with potential consequences for failure to do so.Report

      • Avatar Glyph in reply to Mike Schilling
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        says:

        Yeah, I am not in CA but that’s my understanding elsewhere. They can simply refuse to make the sale at that price.* (Though if it’s not a huge amount of money they will often simply meet it or at least go partway, for service).

        If this sort of thing happens often enough that it becomes apparent it’s not just a one-off mistake, but a form of bait and switch, they can be sued.

        *Not sure where the retailer is located, but I ordered a product through Amazon where the vendor was listing a case of product X at the price of a bottle of product X. Suspecting it was in error, I ordered anyway – worst-case scenario would be that I just get a bottle at a bottle’s price (best-case scenario of course was that this really WAS a crazy good deal).

        When the single bottle arrived as I’d expected, I e-mailed them and linked them to their product page, asking where the rest of my bottles were. They of course acknowledged the error, apologized profusely and told me I had to understand there was no way they could meet THAT price, refunded me the price of the single bottle they’d sent me (hey, MEDIUM-case scenario!), and rapidly updated their page to avoid further losses.Report

      • Avatar James Hanley in reply to Mike Schilling
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        says:

        My time as a state legislative staffer taught me to never make assertions until after I’d read the statutes.

        Particularly since this is a state-level regulatory issue in a federalist country composed of 50 states, plus a federal district and several territories. Whatever one assumes the case is, it’s more likely than not that it’s not the case in all states.Report

      • Avatar Michael Cain in reply to Mike Schilling
        Ignored
        says:

        My understanding of “commodity” is that it refers to any tangible thing that might be for sale or lease, but doesn’t cover intangibles. I seem to recall that in the early days of consumer software sales, there were legal questions about whether “commodity” laws applied. Clearly the floppies were a commodity, but what about the pattern of bits recorded on them? Those of us who are old enough remember software licensing agreements which basically said that there was no warranty that the pattern of bits was anything at all, even if the box did say it was a word-processing program.

        But now we’re way beyond my layperson’s knowledge.Report

      • Avatar DavidTC in reply to Mike Schilling
        Ignored
        says:

        @mike-schilling
        I suspect honest mistakes get a pass in California.

        From what I understand, the exact opposite is true. The entire point of those laws is to make it flat out illegal for prices to ring up higher, via barcode, than the actual posted prices. For any reason.

        Most of the time, before such laws, that actually *was* an honest mistake. But it’s an honest mistake that we simply don’t allow businesses to make anymore, as it was much too easy for everyone to claim ‘honest mistake’ on the 5% of people who caught the error, refund their money, and keep ripping off the 95% of people who didn’t notice the price fly by on the scanner.

        The theory that, for everyone person that catches such a thing, a large amount of people already got ripped off. Just letting them go ‘oops’ is not a reasonable remedy. They need to have systems in place to stop such a thing from happening at all.

        I worked in a gas station once, and we have to follow a specific rule to obey the law: When raising prices, prices on the sign go up first, and get raised at the pump only after everyone’s cleared out. But when lowering prices, prices go down on the pumps first, and then the sign get changes. Why? Because it’s illegal to show lower prices on the sign than what you are charging, even for one second.

        Although I’m confused by the California one. I suspect that law is only supposed to apply to marked prices in the store. Not advertising flyers and whatnot.

        If someone comes in with an ad that says one thing, but the shelf says something else, that’s not awesome, but that’s just deceptive advertising. A higher price ringing up at the register and the customer not realizing they overpaid is a more direct form of fraud, verging close to outright theft.Report

      • Avatar Gabriel Conroy in reply to Mike Schilling
        Ignored
        says:

        Anecdote: at one of my fastfood jobs in college, the fast food company printed a sticker that said something like, “1 sandwich for .99 cents.” Obviously, the coupon meant “1 sandwich [or whatever it was] for 99 cents [or for .99 dollars].” But a customer pointed it out to the manager and he went ahead and gave him the sandwich [or whatever] for a penny. I don’t know if he was legally required to do that, but it was probably a good business decision. (It might not have been good if a general announcement had been made to the effect that all customers could get the whatever for a penny.)Report

      • Avatar Michael Cain in reply to Mike Schilling
        Ignored
        says:

        I worked in a gas station once, and we have to follow a specific rule to obey the law…

        I didn’t read all of the relevant California statutes, but did notice that they have a separate set of rules for gasoline and oil prices. It’s amazing how much cruft has accumulated in state statutes over the decades, and the historical reasons for why certain things ended up in now-unexpected places.Report

      • Avatar DavidTC in reply to Mike Schilling
        Ignored
        says:

        @michael-cain
        I didn’t read all of the relevant California statutes, but did notice that they have a separate set of rules for gasoline and oil prices. It’s amazing how much cruft has accumulated in state statutes over the decades, and the historical reasons for why certain things ended up in now-unexpected places.

        You just know that if gas stations were allowed to ‘be wrong’ on their sign, they would. It’s a perfectly reasonable business model…by the time people pull up to a pump, even assuming they do check the price and notice it’s wrong, they’ve already made a commitment to go to that gas station instead of another. So just put up a sign ‘accidentally’ advertising prices 20 cents cheaper than the actual price, and, boom, customers.

        Almost every ‘Businesses cannot do this’ law exists solely because a business did do that. 😉

        It’s the same with ringing up the wrong price…you’d be amazed, back when bar code scanners came out, how many businesses ‘accidentally’ ran up a higher price. And if you caught it, they’d be happy to not only correct it, but give you a discount! Because for customer who caught it, there were 20 people who didn’t.

        The government eventually said: Uh, no. You can’t just correct the price when people catch it. We see what’s happening here. It’s now just completely illegal, even ‘accidentally’, and if we catch you doing that ‘accidentally’, we’ll fine your ass. You better put in procedures so that doesn’t happen, because we’re now erring on the side of ‘you did that on purpose’ and you better have a damn good explanation of how that mistake happened.

        (This was back when governments actually did things like that. Now, the government would politely ask the grocery industry to maybe not do that so much. Ha, I kid. The government wouldn’t do that.)

        That said, it obviously might make some sense to go through the laws and optimize and consolidate them a bit.Report

    • Avatar Michael Cain in reply to Matty
      Ignored
      says:

      Depends on the state and the situation. Here, stores that scan UPC codes to get pricing information at checkout may not charge more than the price marked on the shelf. At my grocery, special pricing tags are yellow rather than the usual white. From time to time you see someone walking around the store with a wireless scanner “shooting” the yellow tags so the computer knows what special prices are still posted.Report

  10. Avatar DavidTC
    Ignored
    says:

    There’s a local grocery store here that adds 10% on top of all their prices. Not as tax. They list prices that are 10% lower,and add 10% at the register…and *then* add tax. Although they do actually put notices that of that everywhere.

    I consider this somewhat deceptive, to say the least.

    They’re pretending that the prices they list are cost, and the 10% is, I dunno, profit. This is obviously insane, every product in the store cannot possibly have the same profit margin. (And 10% is either much too low or much too high, depending on what they mean by ‘cost’. More than 90% of the cost of food is getting it to the grocery store.)

    I still shop there, though. Better there than the alternative…Walmart. (And, frankly, the store’s method of hiding their true cost is somewhat better than Walmart’s hiding of their true cost.)Report

    • Avatar DavidTC in reply to DavidTC
      Ignored
      says:

      Erm, I mean, more than *10%* of the cost of food is getting it to store. Not 90%. That would be crazy.Report

    • Avatar Michael Drew in reply to DavidTC
      Ignored
      says:

      Are you sure it’s not a co-op? Prices listed are for members (anyone can be a member, it’s just a one-time membership fee usually payable in installments and usually refundable). It’s 5/10% more for non-members. That’s what co-ops tend to do. It’s pretty transparent and in my experience they’re pretty clear when they ask you if you’re a member at the register what the benefits of membership are. They stop explaining it after a couple times once they start to recognize you and remember you’re so far deciding not to join.

      If this is a co-op and they they’re not explaining this to you when you go to the register, that’s a failure of customer service, but in my experience they tend to be pretty good about it. I don’t think the membership model itself is nontransparent, though. If it’s not a co-op and it’s just what this grocery store does, yeah, that’s a pretty weird, though I guess savings clubs are basically the same thing? It may just be a matter of giving them a bit of information about yourself. Again, if they’re not explaining it to you at the register, that’s a customer service lapse.Report

      • Avatar DavidTC in reply to Michael Drew
        Ignored
        says:

        Uh, no. This is not a co-op, this is not a savings club. This is not some confusion where getting the lower prices is possible.

        This is a perfectly normal grocery store that is listing all prices at 90% of what they should be, and then putting ‘Plus 10% at register’ below every single one of themReport

      • Avatar DavidTC in reply to Michael Drew
        Ignored
        says:

        It’s called ‘Fresh and Frugal’.Report

      • Avatar Michael Drew in reply to Michael Drew
        Ignored
        says:

        Where is it?Report

      • Avatar DavidTC in reply to Michael Drew
        Ignored
        says:

        Uh, why? It’s actually pretty easy to find if you Google, it’s the first hit. But I have no idea where this is going.

        This is not some sort of basic misunderstanding on my part, some fundamental misunderstand of how grocery stores work. There is not some secret club that I have failed to join. It is not some co-op that offers discounts to members.

        They *really are* posting prices that are 90% of the actual price, and then saying ‘Plus an additional 10% at register’.

        I’m getting a little annoyed at explaining this. This is an actual true fact that is actually true.Report

      • Avatar Michael Drew in reply to Michael Drew
        Ignored
        says:

        Where this is going is I’m curious what store it is. I didn’t know if it was a chain, so I asked where it is in case a search produced multiple locations.

        Relax, dude. I’m not suggesting I don’t believe anything you’re saying. It’s just kind of a coincidence that that is very much the way “some co-op” and “some club” (it would be kind of stupid to keep it secret if the point is to get email addresses) work, that’s why I asked. I’m just curious what’s up with this store.Report

      • Avatar Vikram Bath in reply to Michael Drew
        Ignored
        says:

        That is quite bizarre. I’d be curious enough to ask one of the other customers or perhaps the cashier what’s going on.Report

      • Avatar veronica dire in reply to Michael Drew
        Ignored
        says:

        They explain it on the website. To me, it seems a really lame-ass gimmick. But whatevs.Report

      • Avatar Vikram Bath in reply to Michael Drew
        Ignored
        says:

        Here’s what I found on the Fresh n’ Frugal web site above the fold:
        “We price every item at cost or below and then add 10% at check-out. No loyalty card or complicated sales promotions required to save money.”

        …which would probably dissuade anyone who is familiar with the grocery industry from shopping there absent any other information. Typical grocery store margins are 2-3%. A 10% markup is actually really high.

        Then again, the above quote doesn’t say whether the cost they refer to just includes the purchase price or if it includes the total costs the store incurs.Report

      • Avatar Michael Drew in reply to Michael Drew
        Ignored
        says:

        @vikram-bath

        Do you know what average overhead is in the grocery retail industry?

        In any case, it’s certainly weird, annoying pricing.Report

      • Avatar Vikram Bath in reply to Michael Drew
        Ignored
        says:

        It’s 2-3% with few exceptions. Actually, 1-3% might be more like it. Here is a chart of profit margins for Kroger over the past 5 years. Note how stable it is and how it never once makes it to 2%.
        http://bit.ly/1jKQirq
        Even Whole Foods always stays below 5% over the same time period.

        Groceries are not really an attractive business to be in. People mostly shop on price. You can do some things to attract people who aren’t as price conscious, as Whole Foods has done, but those modifications require a lot of investment.

        One of the questions I struggle with to this day is why companies like Amazon try to sell groceries. Even if they are successful, there is little to be won by getting that business. My working hypothesis is that they imagine there are big gains from having a complete catalog of stuff. By having everything, they might discourage people from checking other places to buy things entirely.Report

      • Avatar Will Truman in reply to Michael Drew
        Ignored
        says:

        I think that’s probably right vis-a-vis Amazon and groceries. Ultimately, I think they want to be the everything store where basically everybody gets everything they need on their doorstep in the morning (or afternoon). Then getting something from not-Amazon requires a break from the routine.

        Or just dot-com arrogance.Report

      • Avatar Michael Cain in reply to Michael Drew
        Ignored
        says:

        One of the questions I struggle with to this day is why companies like Amazon try to sell groceries.

        Assuming that Amazon stays away from produce, things get a bit better. One of the banes of a big supermarket is abandoned carts with expensive produce that can’t be reshelved. As well, Bezos doesn’t seem to be particularly interested in profits right now so much as cash flow. My dad worked for one of Warren Buffett’s insurance companies; they were supposed to break even, but didn’t have to be profitable because what Warren wanted was all those billions of cash flow dollars from the premiums.Report

      • Avatar Saul DeGraw in reply to Michael Drew
        Ignored
        says:

        @vikram-bath

        IIRC, Amazon groceries is only available in certain markets and those are mainly large cities like NYC.

        There are neighborhoods in NYC that do not have moderately priced supermarkets within a walking distance. One produce market in my old neighborhood is becoming a J.Crew. The main supermarket (not a very good one) just got bought by developers who want to make a two-story mini-mall. There is a butcher, a cheese store, a wine store, a beer store, a bunch of bodegas of frozen meals and late-night pints of ice cream and six packs of beer but nothing really for fruits and veggies. The closest supermarkets are expensive. Two of which are not very close or easily accessible by bus and subway. Carting groceries via subway is not very fun.

        Before Amazon, there was FreshDirect which promised to bring groceries to your door and they gave really good windows for delivery unlike UPS.

        In someways the internet is returning us to old-time service because I think grocery stores used to do deliveries. You would call the grocer and tell them what you wanted and someone would deliver it to your door.

        There are all sorts of services that exist for people who live in city apartments without things like laundry machines. Why stick around the laundromat when you can do wash and fold?*

        *I knew graduate students who were otherwise penny-pinchers who would do wash and fold because they hated doing laundry.Report

      • Avatar Saul DeGraw in reply to Michael Drew
        Ignored
        says:

        Michael Cain,

        I am pretty sure Amazon is going to do produce because FreshDirect does produce.Report

      • Avatar Brandon Berg in reply to Michael Drew
        Ignored
        says:

        How does that work, exactly? Unless you just keep adding new customers, I’d expect claims to catch up with premium payments very quickly. And it makes even less sense with a grocery business. The expenses are front-loaded (you build out the infrastructure, then stock stuff, and only then sell it), so how can you have positive cash flow without turning a profit?Report

      • Avatar Brandon Berg in reply to Michael Drew
        Ignored
        says:

        I’m pretty sure Amazon is going to sell produce because it’s on their front page.Report

      • Avatar Gabriel Conroy in reply to Michael Drew
        Ignored
        says:

        @saul-degraw

        I knew graduate students who were otherwise penny-pinchers who would do wash and fold because they hated doing laundry.

        This isn’t particularly relevant, but when my job moved from 20 hours per week to full-time, I found that I didn’t have time to do schlepp the laundry to and from the ‘mat any more. So my wife and I decided to do drop off. It costs about twice as much (about $16 per week instead of about $8), but it’s worth it. It was one thing when I worked part time and could go during non-peak hours; quite another thing when I’d have to go when everyone and their children are there.Report

      • Avatar Glyph in reply to Michael Drew
        Ignored
        says:

        If Amazon starts delivering groceries in my area, my last reason to leave the house is gone and I can begin (or complete) my slide into hermitude and madness. Better start polishing up that manifesto now.Report

      • Avatar Vikram Bath in reply to Michael Drew
        Ignored
        says:

        @brandon-berg, most insurance company actually run underwriting losses, meaning that they pay out more nominal dollars than they take in for any given policy. I think people’s mental models of insurance companies is the opposite–that they pay a premium, the insurance company takes its cut, and the remainder is paid out in claims,but there are few companies that manage that (underwriting profits).

        The way they make money despite underwriting losses is hinted at by my use of the word “nominal” in the prior paragraph. They take in premiums now, and hopefully only pay out claims much later. In the meantime they can invest the money.

        So, using a totally made up and simplified example, assume a company collects $10 million in premiums. They are able to earn a return of 6% on those premiums, which gets them to $10.6 million. Now say they receive claims of $10.4 million. That gives them an underwriting loss of $400,000, but they still retain a $200,000 profit off their investments, which can be reinvested along with the premiums coming in for the next year…Report

      • Avatar DavidTC in reply to Michael Drew
        Ignored
        says:

        @vikram-bath
        …which would probably dissuade anyone who is familiar with the grocery industry from shopping there absent any other information. Typical grocery store margins are 2-3%. A 10% markup is actually really high.

        Then again, the above quote doesn’t say whether the cost they refer to just includes the purchase price or if it includes the total costs the store incurs.

        Yeah, 10% is way too high if they mean ‘We add 10% profit to what it costs us to sell it’.

        OTOH, it’s way too low if they mean ‘We purchased this good for this amount from the people who make it, and we are charging 10% more’. They can’t get it to the store and put it on the shelves and pay for air conditioning and employees and whatnot with just 10% extra, much less make a profit on it!

        I’m pretty certain by ‘10% above cost’, what they actually mean is ‘10% above 90% of what we want to charge for it’. I.e. their actual cost has no relationship to the price at all. They just pick a price, reduce it by 10%, and post it.

        I actually had the weird idea once that this something to do with price matching. But I couldn’t figure out how…I don’t think they price match, and surely Walmart (The other grocery store in town.) would quickly figure out that their advertised prices all said ‘Plus 10% at register’.Report

      • Avatar Kim in reply to Michael Drew
        Ignored
        says:

        Saul,
        Pittsburgh does Prime Pantry, and that’s a third tier city. So, um, not just the big boys, yeah?

        **They only managed to explode two bags of chips. Good for the first day.Report

      • Avatar Kim in reply to Michael Drew
        Ignored
        says:

        Vikram,
        “supermarkets” are not attractive. Aldi’s TraderJoe’s Costco — all have far far better profit per square foot.Report

      • Avatar Plinko in reply to Michael Drew
        Ignored
        says:

        Given the costs of wages, energy, labor, equipment and real estate/rent – not to mention various types of product loss and coupon dilution- grocery store product markups are certainly much higher than 10% on average for them to net out 1-3% profit.
        Certainly some high-volume, less perishable goods probably run at well below 10%, if not at a loss, to function as traffic-drawing loss-leaders.
        Kroger, for example reported their 2013 cost of goods at $71.3B out of sales of $90.3B for a rough total gross markup of at least 20%, and that’s a floor given I can’t figure out what, if any, other costs might be included.
        That gross shrinks down to a 1.5% profit after SG&A eats up most of that gross margin.

        That said, if you believe for one second that any store is putting a price label on the floor with the real cost they paid the supplier for any product, I have a bridge to sell you.Report

  11. Avatar Murali
    Ignored
    says:

    In Singapore, all sales taxes are included in the display price. If something is 95 cents on the shelf, I pay no more than 95 cents, sometimes less. When I book a flight with Singapore airlines, the only additional costs are for upgrading my seat, additional baggage and travel insurance. Otherwise all prices are listed upfront. I seriously do not understand this business of not displaying the combined price on the shelf. Or at least, I don’t understand how there could be any non-deceptive purpose to it.Report

    • Avatar Jaybird in reply to Murali
      Ignored
      says:

      Retailers and a certain subset of political nutballs *LOVE* the idea that taxes just jump up and bite you at point of purchase. “I thought that this would be a dollar.” “Taxes, man. It’s a Dollar-seven.” “Freakin’ Government.”Report

      • Avatar Saul DeGraw in reply to Jaybird
        Ignored
        says:

        There are economic pros and cons for the tax being part of the purchase or added on after the fact. IIRC people are more likely to purchase if the tax is added on at the cash register.Report

      • Avatar Vikram Bath in reply to Jaybird
        Ignored
        says:

        Well, yes. One would hardly employ a deceptive practice so as to *reduce* sales. The whole reason the airlines want to go back to reporting just the airfare at the last minute is that they have found that their marginal customers are balking at the fares they see on the initial screens.Report

    • Avatar Plinko in reply to Murali
      Ignored
      says:

      It’s a little easier to manage when you’re doing commerce in a city-state than when you’re trying to operate locations in multiple tax/legal jurisdictions.Report

  12. Avatar Stephen
    Ignored
    says:

    The price of a medical procedure, either the hospital’s charges or the doctor’s charges, before you go for any surgery or procedure is another opaque purchase area for customers. Whenever I ask, they get very uncomfortable, claiming that there’s no accounting for the unexpected during the procedure. But, when I’ve asked for a base price, not counting the unexpected, rarely will anyone actually quote a figure. For those of us who have good insurance, we don’t usually have to worry. But, you’d better make sure in advance that the doctor, the hospital, and any specialists (e.g., anthesiologists, radiologists, etc.) are all in-network. Else, you’ll be in for a big surprise. Now if you can’t trust those who care for you while you’re sick, injured, and unconscious, who can you trust?Report

    • Avatar Will Truman in reply to Stephen
      Ignored
      says:

      When I’ve been uninsured or underinsured, I’ve typically had pretty good luck getting at least a ballpark price. Usually, when they find out I am paying in cash, a hard price. (Like when I had that mole removed.)

      I do agree that some (forced) transparency here would be good.Report

      • Avatar Kim in reply to Will Truman
        Ignored
        says:

        my employer is actively working on this.
        Of course, being my employer, they have different rates for an MRI based on which hospital you get it at… (some have newer machines, some just have more demand…)Report

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