The High Cost of Low Prices

by Mr. Cheap

NOTE: This is not a post about Wal-Mart. I like Wal-Mart and will preferentially shop there.

Obviously with a name like Mr. Cheap, I like to get a good deal. I understand other people who want to get a good deal. What I don’t totally get is people who want a cut-rate on a top-rate product or service. Champagne on a beer budget just isn’t possible.

Airlines get quite a bit of abuse about the low quality of service they offer. The seats are small, the service is surly, and the food is bad (and more recently, non-existent). The joke of this complaint is if you want top-notch service in the sky, you can get it. Just buy a first-class ticket.

Myself (and everyone I know) pick their ticket for a trip based on the lowest cost. Potentially I’ll pay a few bucks more for a direct flight, but I wouldn’t pay more for a “higher quality” airline. How can people blame the airlines when they rationally respond to this by doing everything they can to lower costs (and therefore price)?

I like to complain about phone service, Internet service and long distance. All of these could certainly be improved by enhancing their quality, but we all choose them based on price (and again, force companies to do everything they can to lower their price).

It would be reasonably straightforward to start a “high class” version of any of these services. Double the price and spend the extra enhancing the service. The fact that no such services exist makes me suspicious there just aren’t enough customers who are willing to support them (with their dollars).

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