If your prices are well above the norm, is it your responsibility to make sure customers know that upfront?
You land in Houston around 10 p.m. You have only a carry-on, so you roll off the plane and into a cab for a 40-minute ride that costs almost $90.
You really should plan ahead a little better, you think.
You check in to a hotel that shall remain nameless. (Cough--Omni Houston Westside--cough.) The desk clerk asks if you want a key to the mini bar. You don't. You're anti-mini bar. You go to your room and toss your bag on the bed.
You're thirsty, given that drinking fluids on a plane means an interlude, however brief, in the bathroom on said plane (and who wants that?). Plus, you need to stay up for another couple of hours. Caffeine is in order. So you search for a vending machine.
"Aha!" you cry when you see a sign that says "Vending." You poke your head in the doorway to see an ice machine on one wall. The other walls are empty, aside from several rectangles of paint that make it look like a vending machine crime scene.
You check another floor and discover similar vending machine crime scenes.
So you try the atrium area. Restaurant and bar: closed. Gift shop: closed. Darn, you think, and here I wanted to pay double price for a Houston Texans polo shirt.
By now, you've become Dr. Livingston seeking the sources of the Nile so you soldier on to the front desk. "I'm looking for a vending machine," you say.
"I'm sorry," the desk clerk responds brightly. "We don't have vending machines, and our restaurant is closed."
"Oh," you reply, your wit on full display.
"But you can use the mini bar in your room," she offers helpfully.
So with resignation you take the mini-bar key and make the solitary trek back to your room without ever running into the intrepid H.M. Stanley. There you unlock the secrets of the mini bar: assorted snacks, candy bars... and a glistening can of Diet Coke.
You take a quick look. No price list. "How much can it cost?" you think. "A couple bucks?"
Three days later, your bank statement indicates that a can of Diet Coke can--and in this case most definitely does--cost $8.44.
Just for fun, you call to inquire. "Don't you think $8 is a little high for a 12-ounce soda," you ask, "especially since I had no way of knowing it would cost that much?"
"Don't you think you should have referred to the price list before you removed the soda from the mini bar?" a very pleasant voice replies.
"I didn't see one," you say. "There wasn't one in the mini bar or on the cabinet."
"Oh, well, we do apologize for that." Then the heretofore pleasant voice drops down an octave. "But your room agreement clearly states that you assume financial responsibility for any and all items removed from the mini bar."
You get off the phone. Yes, you think, it probably did state that, but who reads that stuff? (Not you.) And it is true that you did not take further steps to determine the price.
Still, you wonder: At what point is a price not just high but unconscionably high?
Let's Talk PricingTheory
I totally understand the concept of value pricing: A one hour sitdown with Warren Buffett is worth a lot more than a session with the financial adviser down the street.
Even so, the value of a can of Diet Coke is, depending on the setting, fairly well established. So when value boundaries are in large part established and your price falls well outside those boundaries, are you responsible for ensuring potential customers are aware?
The same is true for convenience markups, even though in this case the convenience provided is owing to a somewhat imposed inconvenience. Are you responsible for ensuring potential customers are aware? After all, convenience stores display prices clearly for just that reason.
So forget my $8.44 can of Diet Coke for a second. I'm not upset about it. (It's kind of funny when you think about it.)
But my soda does raise a larger question: What responsibility does a merchant bear for charging "fair" prices and for ensuring customers know when prices fall well outside of expected norms? Or is it always the customer's responsibility to find out?
JEFF HADEN learned much of what he knows about business and technology as he worked his way up in the manufacturing industry. Everything else he picks up from ghostwriting books for some of the smartest leaders he knows in business. @jeff_haden