The problem is that these companies know exactly how to ride that line between what we’re willing to put up with and what we’re not willing to put up with. Therefore, if we’re happy, they know they’ve got room to increase prices. If we’re calling them and threatening to cancel our service or stop buying their product, they’re likely to hold the price still. In rare cases, they could even drop prices—depending on how pissed we are, and wether we already dropped their service or product.
I feel that there are three levels that we move through as prices increase:
For example, you might call them up and say, “Your prices are too high, and if you raise them any higher, I’ll cancel my service.” You’re probably not lying, and they know this. It’s exactly the reason that a company is not likely to raise prices if they’re getting tons of complaints, unless they have no choice but to do so. The real trouble is when you become conditioned to the outrageous price and you move up into the “tolerant” category.
When consumers in general fit into the “tolerant” level, companies know that they can increase their prices without losing you as a customer. Let’s take the example of increasing gas prices.
When I started driving, gas was $.70/gallon, which made me happy, since I really didn’t have any money. WIthin a few years, gas jumped up to $1.50/gallon, at which price I was tolerant of the price. I remembering becoming concerned when gas breached $1.80/gallon, and many others felt the same way; when it did, gas prices hovered close to $2/gallon before we became tolerant of that price. Then it rose again.
Recently, as we’ve become used to gas prices above $3/gallon, gas hit a high of just over $4/gallon, at which point users became intolerant and began seriously looking for ways to become less dependent on gasoline. Not surprisingly, the price dropped down to about $3.65/gallon, where we seem to be tolerant of the price, though slightly concerned.
This model moves beyond prices and into other realms of our lives, such as advertising. Commercial breaks used to be shorter and more tolerable, but networks pushed the envelope to get us to the “concerned” position; commercial breaks could have as many as ten commercials in a row. As we’ve become intolerant of this, many of us are looking at Internet-streamed television programming.
Hulu used to feature only one commercial per break. When I tried the service last week, they were up to two commercials per break, where I remain tolerant, knowing that as soon as the company knows this, it’ll jump to three or more. As long as we’re not being vocal about our intolerance for the number of commercials they’re streaming, they’ll keep testing the waters by increasing the commercial count slowly; therefore, when I cancelled my Hulu Plus account during the trail phase, I informed them in the survey that two commercials per break was too many—a lie, but a sort of public service to existing Hulu customers.
You can apply this model to just about any business or political situation: Apartment rent prices, insurance costs, taxes; it might even work as a parenting strategy. As the consumers, the ones who are giving out money, we are the ones who control the system. If we appear to be on the verge of intolerance, we’ll get our way.
Even if we’re content with the state of our prices or programming, or anything else that can go from good to bad, we need to portray a concerned mood about the status of these things. If we’re honest, they’ll know how to manipulate us more to maximize their profit at our expense. We need to appear motivated enough to communicate our concerns so they they know that we’re not going to tolerate any more movement in the direction we don’t want. By this means, we can control them. Follow @torqtorq