Monday, 10 April 2017

The BBC is Not Always Rubbish

Contentious sentiment, huh?  But, just once in a while ...

Here's an interesting BBC article on a good Capitalist topic: 'two-part pricing' - the sale of (e.g.) below-cost printers to hook you on their overpriced ink: a phenomenon that sometimes makes one grind the teeth.  Rent-seeking; they're all at it.

Anyhow this Beeb writer attributes it to Mr Gillette and his razor-blades.  (Did giving kerosene lamps to eskimos** post-date this?)  It's all a bit entry-level, but he goes on to discuss the dynamics of two-part pricing more generally:  locking the customer in via patents on the refills, or technology for the same effect - those bastard chip-readers that prevent you from using a knock-off.  (The software in my printer is yet more subversive than that: but I'm even smarter still ...).

Also discussed are the psychological factors which is where it gets really interesting, for economists as much as psychologists.  "Two-part pricing can be highly inefficient, and economists have puzzled over why consumers stand for it. The most plausible explanation is that they get confused."  Well, maybe.  But yes: teaser-rates, free trials, 'customer loyalty', inertia in general - all phenomena worth recognising.  And the really serious matter of barriers to exit / barriers to switching:  hey, I spent some time in the enterprise software business and believe me, the thought of switching out of a big, more-or-less reliable piece of enterprise s/w is enough to make most companies stay rooted to the spot in a cold sweat, long after they should have jumped ship.

Good old Beeb, eh?   (*ducks*)

ND  

 ________
** am I allowed to say that?  or should it be native Inuit-type Canadian indigenous peoples ...

19 comments:

David Hall said...

Actually, pretty much all of the podcasts from that series are quite interesting. When the BBC doesn't try to get all political it can come up with some cracking stuff.

john cheshire said...

None of this, though, justifies the way the sodding bbc is funded.

DJK said...

Very interesting. Kodak is another example. People sometimes point to Kodak failing to survive the transition to digital cameras. But how could they? Kodak made its money by selling film; any cameras they sold were to get more people buying film. With a digital camera there are no consumables to buy.

Anonymous said...

This is very pertinent for me at the moment. I've just moved and have been charged several times to leave. Firstly BT(landline phone and broadband...I'm ditching the landline completely. Then there's car insurance a hefty charge just to change the address. I've also ditched the house insurance and they(Saga)have sent me a bill for more than £75 with absolutely no explanation as to what it's for. Apart from that to actually sell my house which had a leasehold car-port I had to "buy" a "seller's pack" for £150.

Locking people in to things is what companies are getting very good at and then inertia reigns eg I had the boiler service as an add-on to the house insurance which makes it harder to change it.

Needless to say I'm thinking twice before entering any more such agreements. I've never had to pay out like this when I've moved before. Rant over....

Blue Eyes said...

I used to think that the Licence Fee is an abomination, but in today's zero-value-added-journalism click-bait attention-seeking who-cares-if-it-is-true era I think I may have changed my mind.

Blue Eyes said...

On the substance, this is what competition authorities are supposed to be for.

I know that supra-nationalism is nit fashionable these days but imagine if the G7 (for example) countries agreed to co-ordinate policies to help competition and consumers?

Steven_L said...

With a digital camera there are no consumables to buy.

Well Adobe make you pay monthly for Lightroom now, and they bundle it up with Photoshop for about a tenner a month. and Adobe is worth $65bn now.

So in hindsight, Kodak should have developed some photo editing software or at least bought Adobe in the 1990's.

K said...

@BE But even in the BBC is in on the clickbait. Look at how often stupid shit from Newsbeat is displayed on the front page of BBC News. That would have been unthinkable 2-3 years ago.

There's no Newsbeat on there right now but there are two worthless stories featuring Youtubers ("How to destroy the new five pound note" with Periodic Videos and "New YouTubers told to 'do it for love'" with the Yogscast).


@Steven_L Adobe is a much more important company than most give them credit for. They actually make most of their money from Acrobat (PDF editing) and are responsible for a lot of the software behind font rendering and printing. At one point every time you bought a printer Adobe would get a cut.

Charlie said...

Hands up if you pay Apple 79p a month for extra iCloud storage just to stop your iPhone nagging you that its backup doesn't fit into the default storage allocation of 5GB, handily much smaller than the memory capacity of any product they offer.

Anonymous said...

" locking the customer in via patents on the refills, "

As a tactic, it doesn't work that well when the cartridges cost nearly as much as a new printer.

My Samsung Laser FEG, something like £140 new, replacement toner 4 pack £126. At some point the decision is made to just throw away the printer an buy a new one.

At which point you are not locked to the original manufacturer.

dearieme said...

I suppose the Beeb approves of "one part pricing" i.e. the poll tax which it coerces from us.

K said...

Printers (well, lasers at least) aren't actually a good of an example of this.

If you've ever tried to keep business printers running flawlessly (thousands of prints per day with no smudges, etc for years) you will know it's basically impossible. Thus for a decent sized business it's very important to have a support package for printers.

So for example, if you look at the terms on an official HP cartridge every purchase actually entitles you to another 6-12 months of printer support which includes things like 24 hour replacements, free yearly services, etc.

The problem is that home users never take advantage of these addons and most don't even print enough to require them anyway. Thus home users would be better off buying third party "compatible" refills. Long term they will wreck your printer but if you only refill a couple times a year it will take a long time to do any serious damage.

Bill Quango MP said...

harlie - I raise my hand.
AND - I saw this on BBc and read it. So it attracted me as well.
And .. I have form on throwing away a nearly new printer instead of buying the ink. Like mobile phones, just switch to whatever the latest deal is. AND .. I would happily pay more for the printer, and do, when the ink is reasonably priced.

AND..!! .. Kodak invented the digital camera. Which they decided against doing with.
Even when they realised it was the future.
Those conspiracy theories of the inventor of the water powered car that the petro companies pay billions of $ to to keep off the market are just fantasy. If its invented, it will come .
How else would we have electric cars?

K said...

@BQ

I would happily pay more for the printer, and do, when the ink is reasonably priced

Then don't buy new printers! Even official refills use a lot of recycled cartridges (all the printer manufacturers have recycling programs where large customers can return them in bulk).

Older printers have more empty cartridges, which means more recycled cartridges, which means cheaper refills.

Look on Ebay for a 3-7 year old HP business laserjet and it will be dirt cheap to run.

DJK said...

BQ: "Kodak invented the digital camera..." Yes they did, but they were never really in the camera business, only in the film business. Which is why instead they started making printers, so they could go into the replacement ink cartridge business.

Steven_L: Software pricing, and the pretence that you never own software, you only rent a non-transferable licence, is a whole nother can of rip-off.

Electro-Kevin said...

Buying cheap razors more frequently is just as good as buying Gillette and works out a lot more economical.

It's the branding and habit that sells this sort of stuff. They must curse the Hipster trend though.

We don't have a printer anymore. It wasn't the ink - it was the lack of use it was getting since I started managing my beard.

Anonymous said...

I bought a simple second hand Colour HP Laserjet for £50 (CP1515, not double-sided printing), use generic unchipped cartridges (about £25 for four, one black 3 colour, that's for a few thousand pages) and just ignore the message telling me I'm out of ink.

You can still get cheap Canon inkjet printers that take large generic refills - the MG4250 is 50 quid in Tesco, and non-Canon refills can be as little as £14 for two high-capacity cartridges - probably not the choice for professional standard photo prints, but 'good enough for government and student work'.

Anonymous said...

(You can now buy the chips and stick them on your dodgy cartridges,or even reset existing chips. http://www.proprint.co.uk/chip_resetter.htm)

Blue Eyes said...

Does the nonsense which insurance/broadband companies do fall into this? You sign up for a competitive deal then the moment you are out of the intial period the price goes up massively.

Why are the firms so stupid? I realise they work on customer inertia, but they must lose so many price-sensitive customers by doing it. Talktalk put my price up by a third, so I found someone cheaper than the pre-bump price. Talktalk could have kept my custom if they hadn't done that.