Produce Pricing Practices
I went to the produce store today and I noticed that their pricing system is rather peculiar. Some items are priced by the unit, some by the pound and the method for each individual item seems to be mostly consistent from store to store. How do they determine which is which?
For instance apples are $2 per pound, but oranges were 4 for $1.97. How do they decide that? They are both fruits, both come from trees, and are about the same size, weight, and shape. I know the cliché says you can’t compare them, but you would think it would be okay to at least price them consistently. I can see why one might cost more than the other, but not why one should be priced per unit and one per pound.
When I see stuff like that I always wonder “why is this this way?” The answer is almost always one of the following two options:
A. It has been determined to be the most efficient system by market forces over many years.
B. Whoever thought of it was stupid, high, or both.
When deciding, most people default to option A, but I’ve learned over the past few years that it’s actually option B that is behind most of society’s irregularities. Most stuff that seems out of place actually is out of place, and it is that way because somebody who wasn’t too bright made the decision long ago and everyone else just followed along.
May 18, 2006 at 6:37 pm
Start with a cage containing five monkeys.
Inside the cage, hang a banana on a string, and place a set of stairs under it. Before long, a monkey will go to the stairs and start to climb towards the banana. As soon as he touches the stairs, spray that monkey and all of the other monkeys with cold water.
After a while, another monkey makes an attempt, with the same result- all the monkeys are sprayed with cold water. Pretty soon, when another monkey tries to climb the stairs, the other monkeys will attack that monkey in order to prevent it.
Now, put away the cold water. Remove one monkey from the cage, and replace it with a new one. The new monkey sees the banana and wants to climb the stairs. To his surprise and horror, all of the other monkeys attack him. After another attempt and attack, he knows that if he tries to climb the stairs, he will be assaulted.
Next, remove another of the original five monkeys and replace it with a new one. The newcomer goes to the stairs, and is attacked. The previous newcomer takes part in the punishment with enthusiasm!
Likewise, replace a third original monkey with a new one, then a fourth, then the fifth. Every time the newest monkey takes to the stairs, it is attacked.
Most of the monkeys that are beating him have no idea why they were not permitted to climb the stairs, nor why they are participating in the beating of the newest monkey.
After replacing all of the original monkeys, none of the remaining monkeys has ever been sprayed with cold water, nor do they know why they behave that way. Nevertheless, no monkey ever again approaches the stairs to try for the banana. Why not? Because as far as they know, that’s the way it’s always been done around here.
And that is how many a company’s sales practices have developed.
May 18, 2006 at 8:06 pm
Yeah, but was the banana you hung priced by unit or by weight?
August 7, 2006 at 8:48 pm
Two words: Supply and Demand. A very simple equation even for stupid people.