Sunday, 31 January 2016

If you want a lilac pen you deserve what you get!

Apparently Tesco charge twice as much for their standard pen if you buy it in lilac.  There were politicians on Radio 4 calling this discrimination against women.

I say two things - 1. Grow up!  2. Isn't it a bit sexist to assume only women like lilac pens?

What amazes me is that we have MPs who either naïve, or are attempting to patronise everyone by saying it is an issue.

It isn't an issue it is economics.

How does pricing work?

It is very simple, there is only one product that is remotely likely to be priced based on what it costs.  The standard product.  Examples are:

the economy / basic / family range in the supermarket.  This is a tin of beans for 18p or a can of soup for 24p etc.

a clear plastic biro (not a lilac one).

the first week of the season in a hotel

the small unglamorous small engine car,

a second hand car rather than a new one

and the best example - the most simple basic coffee in a coffee shop.

These are the basic items aimed at people who only want to pay what they have to.

What l want to go onto is something economist call signalling.  If l buy at the standard price I am signalling l don't want to pay extra.

The other prices, e.g. the prices for the seats at the front of the plane, the cruise berth with a balcony, the room with a view, the lilac coloured pen, the Heinz Beans, the Mercedes Benz or BMW, or the frothy mothy chocky locky coffee with marshmallows and yoghurt; are meant for people who want to signal something different.

These prices are for people who are signalling "I want something better and l am willing to pay for it."

By them paying double for their coffee just to get 2 marshmallows on the top, for example, they are enabling the shop to sell everyone else a coffee for half the price.

Is charging double for a lilac pen discrimination?  Not at all.  Some people choose to pay double.  There is a price if you want to feel special, and if you want to pay it go ahead - otherwise buy a clear plastic pen.

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