Über die Autorin bzw. den Autor

Sarah Maxwell, PhD, is an expert in fair pricing, with both academic and business experience in this field. She is an Associate Professor at Fordham University and is Co-Director of the Fordham Pricing Center. Dr. Maxwell is also Associate Editor of Pricing for the Journal of Product and Brand Management and has written for a variety of publications, including the Journal of Business Research, Journal of Economic Psychology, and the American Journal of Economics and Sociology. Previously, Dr. Maxwell was a vice president of marketing for Aramark and consulted with divisions in Europe and Japan. She has also consulted and taught in several countries including India, China, and Brazil.

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Praise For The Price Is Wrong

"Consumers will no doubt benefit from the book's insights and arguments. They will, for example, be better able to negotiate a fair price and avoid the unfair pricing practices of unscrupulous salespeople. Businesses will also benefit from understanding the emotional aspect of pricing, and students, too, can benefit from appreciating the principles of fair play that underlie our economic system."
―From the Foreword by Jon Luther, Chairman and CEO, Dunkin' Brands, Inc.

"Almost every day in our lives, we are confronted with purchasing something, and in all but the rarest situations, we pay the price which is placed directly under the object we are purchasing. There is no room for negotiation, simply acceptance. After reading this book, you will be a more informed consumer and recognize that price is a function of the marketplace tinged with some art and a little mathematical science. The Price Is Wrong will make the average consumer feel more educated and more understanding, and possibly make his next purchase a little more palatable."
―Edwin A. Cohen, Chairman, Intranasal Therapeutics, Inc.,and founder and former CEO, Barr Laboratories

"This is a wonderful book that applies modern social science research to the problem of pricing. The Price Is Wrong illuminates the psychological nature of price perception and the disastrous consequences of unfair pricing policies. I recommend it to all who are concerned about the complex human aspects of business."
―David M. Messick, Morris and Alice Kaplan Professor Emeritus of Ethics and Decision in Management, Kellogg School of Management, Northwestern University

"Sarah Maxwell's application of the considerable body of research on fairness to marketing is pathbreaking. Her work will undoubtedly move marketing research into a new direction, and will stimulate further applications of fairness research to world problems."
―Edward E. Zajac, Professor of Economics, Emeritus, University of Arizona, and author of Fairness or Efficiency: An Introduction to Public Utility Pricing and Political Economy of Fairness

Aus dem Klappentext

The subject of price fairness is one that affects us all, whether we're consumers or merchants. And while concerns about fair pricing are constantly being voiced, this topic has not been explored as thoroughly as you might think.

Author Sarah Maxwell is a pioneer in the field of fair pricing. Throughout her career, she has seen how pricing practices across a variety of different areas, from mobile phones and airline tickets to prescription drugs and gasoline impact our everyday lives. Now, with The Price Is Wrong, Maxwell shares her deepest insights on this issue and examines both the psychological and sociological basis of fair pricing.

Written in a straightforward and accessible style, this book puts fair pricing into perspective by integrating the author's own research with examples of right and wrong pricing, reports from reliable resources, and the contributions of those who have experienced the true cost of unfair pricing firsthand.

Divided into three comprehensive parts, The Price Is Wrong opens with a brief background discussion of this important issue. It quickly moves on to outline a model that explains how personal and social fairness can lead to escalating emotions within consumers. Each element of this model is skillfully illustrated, so you'll become familiar with how judgments of price fairness can increase consumer trust, as well as destroy it if sellers decide to abuse their power. In the final section, Maxwell reveals how you can effectively apply this model to real-world situations of price fairness such as tipping, negotiations, price discrimination, taxes, and much more.

A fair price is one that is emotionally okay. It is acceptable and just. It has passed the test of personal and social fairness by adhering to the social norms. But when the norms are violated and the price is judged personally and socially unfair, something must be done. With The Price Is Wrong as your guide, you'll come to grips with the slippery idea of price fairness and be in a better position to make more informed decisions when faced with the pricing challenges that are a part of both everyday business and life.

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The Price is Wrong

john Wiley & Sons

Chapter One

"PLAY FAIR OR I QUIT!"

On a road near me, there are three gas stations, all on the same side of the road. One station consistently undercuts the other two by $.01 to $.03 a gallon. Drivers line up for this station, clogging the road in both directions. Customers wait to save, on average, $.02 a gallon. For a 20-gallon tank, that is $.40. If they wait six minutes each time, that is equivalent to $4 an hour. Hardly a minimum wage. Hardly rational behavior.

Gasoline consumers act irrationally because they are mad. They are mad because the price of gasoline is unfair. They perceive the price to be unfair not only because it is high, having recently gone over $3 a gallon, but also because they think the oil industry is acting unfairly.

OPEC exerts unfair power over oil supply: it now controls some 40 percent of oil production and over 60 percent of crude oil reserves. The oil companies make unfair profits: ExxonMobil has posted the highest profits ever recorded by a company. Oil company executives receive unfair compensation: the ExxonMobil CEO is paid over $144,000 a day. Gasoline wholesalers price unfairly: they use some sort of secret "zone" pricing so that some neighborhoods can be charged as much as $.50 a gallon more than others. And at the pump, customers are charged unfairly: they get less for their money on hot days because the gasoline expands.

Consumers react to what they perceive to be unfairness by punishing the oil companies in the only way they can: by demonstrating their anger at the pump. Each one acting individually, consumers wage lonely battles against unfair gasoline prices. But their concerted force is formidable.

Companies can be slow to recognize the force of perceived unfairness. For example, the president of the Western States Petroleum Association, when defending the practices of zone pricing, said "it is a perfectly acceptable form of pricing ... a way for companies to price fairly in different areas." Consumers disagree. They think it is wrong. And some companies are catching on.

For example, in a recent advertisement for the SprintT. mobile phone service, there is a photo of some children forlornly reading a sign outside a playground. The sign gives the playground rules. The first two are:

1. "You have to guess how many minutes you're going to use your ball-for the next two years. Don't guess too high or too low, or you'll be sorry."

2. "Whoever is new on the playground is more special. It's just a fact. Therefore, new kids get the new things. Old ones don't."

The Sprint advertisement then points out the unfairness of mobile phone pricing: extra charges for estimating your usage too high or too low, and lower charges for new customers. It could also mention unfair extra charges for "regulatory issues" and unfair confusion caused by multiple plans and indecipherable billing.

The advertisement explains that Sprint is now rewriting the rules "to make things fair." Sprint has been driven to change their policies due to the public's quiet but effective response to the unfair pricing practices of the mobile phone industry. The company evidently gets it that fairness matters.

It also seems that airlines might be getting it. Since the innovation by American Airlines in 1985 of what is called "yield pricing," the airlines have patted themselves on the back for "skimming the consumer surplus," getting each customer to pay the maximum amount that each one is willing to pay.

The problem has been that one passenger could pay only $150 for a flight from New York to Los Angeles while another passenger on the same plane had to pay $1,500. The passengers paying $1,500 were the business-class passengers who did not make their reservations until the last minute and did not stay over Saturday night. To some extent this was accepted; business-class passengers did, after all, receive upgraded service. But was it 10 times better?

The difference in prices paid for the same flight was only part of the problem. The other part was that no one could figure out how prices were determined. The prices did not make sense. They seemed to change by the hour. Customers were left in the dark, and they rebelled. Again, as with gasoline and mobile phones, the revolt was quiet and steady.

Finally, at least one airline responded. Delta reduced its fare choices to just eight and eliminated the requirement of Saturday night stay-overs. The Star Tribune reported an airline analyst predicting that the industry was "heading toward a more consistent and fair pricing scheme."

It was, unfortunately for Delta, too little, too late. The public was never made aware of its gesture toward price fairness. The company went into bankruptcy and has only recently emerged.

Printer ink cartridges are still a third example of where a company has responded to the consumers' concern for fairness. Ink cartridges have been priced like razor blades: charge next to nothing for the razor but charge up the wazoo for the blades-or in this case, the ink. Because the company's own ink cartridges are the only ones that work in their printer, the customer had no choice. Customers thought this was unfair.

As a result, court cases were instigated. The media pointed out that printing ink costs more per liter than vintage champagne. Bloggers wrote reams of complaints.

Until recently, however, the printing ink companies have persisted in their pricing strategy. But now the fight for fair prices has been taken up by a competitor: Kodak has produced a printer that may cost more but whose ink costs less than half as much as others. The company is charging customers for what they get. That is fair. And charging a fair price is giving the company a competitive edge.

In addition to gasoline, mobile phones, airlines, and printing ink cartridges, similar battles against unfair prices are being fought in many industries. Sometimes the battle is swift, like the quashing of Amazon's attempt to charge different amounts for the same MP3 player to different customers: some people were charged $233.95, while others were charged $182.95. Due to customer anger, Amazon quickly stopped and offered a refund to anyone who had paid the higher price.

Sometimes the battle is relentless, like the hackers who justify their attack on Microsoft software because they think Microsoft's profits are too high. In the summer of 2003, when they launched an attack of viruses and worms on Windows software, one worm left the message: "Billy Gates, why do you make this possible? Stop making money and fix your software."

Sometimes the combatants are organized, like the elderly who go to Canada to buy drugs because they cost 30 to 50 percent less there than in the United States. Sometimes the results are even lethal. Four people in South Africa died during a riot over the mixed-race community's paying for electricity based on meter readings, while others were paying a small fixed fee.

And sometimes the battle is lost, as in the case of the Victoria's Secret catalog. The company offered males a $25 discount on any $75 purchase, whereas females were offered only $10. The court dismissed the case, but the reason was not that sex...