Dumb Economics

Columnists seem outraged that Amazon.com is varying prices. .

This doesn’t bother me at all I buy when I want the product and when the product is cheap enough. Knowing it will be cheaper one day or one month from now does not really alter whether I want the product now.

If the product varies too much, then I might change my mind somewhat. But I’m already factoring in that the cost of books and technology items tends to go down over time (generally speaking). Furthermore, I frequently buy used or discounted items. Prices for used items vary all the time; get used to it.

I bought Season 2 Boxed Set for Third Rock from the Sun a week before Christmas. I bought it used for $16.00. The product never arrived, so I got a refund. While waiting for my refund, I noticed the price had gone down to $12.40. Wow, maybe the no-arrival works out for me. Today I check again; the price had jumped to $14.68. Them’s the breaks.

But there’s an important lesson here. Companies know buying habits. We are desperate to buy things during the last two weeks of Christmas. It makes perfect sense to price them high then (to maximize returns). It also makes perfect sense for customers not to make any purchase decisions during that time. But we do. 20-25% price variability doesn’t seem to greatly affect our determination to buy something (at least for things costing under $1000). Buying something at a particular time has value to the customer. There have been times when receiving a purchase 2 or 3 days early makes an important difference to me.

That said, I’m all in favor of third parties developing tools to allow you to notice patterns in how Amazon.com and airlines price things.







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