Tuesday, July 14, 2009

My War Against Pricing in the Digital Age

the digital age has ushered in a new era of consumer freedom. comparison shopping, lower overhead costs, and convenience have all lowered prices and increased competition for goods sold over the internet, as well as in traditional brick-and-mortar stores. some companies, however, still think that they can charge whatever they want for their goods and services because they think us, the consumer, are just a bunch of rubes. i present two examples:
  • amazon.com. yesterday bill simmons tweeted about a book on sale at amazon. his recommendation, "Live from New York: An Uncensored History of Saturday Night Live, as Told By Its Stars, Writers, and Guests", was on sale for $4.64 (this price no longer seems to be available for the book, but my point is still the same) at amazon so i decided to go and check it out and see how much they were charging for the kindle version (i no longer purchase physical books). i remember purchasing "The Autobiography of Benjamin Franklin" one day for $0.99, so i thought i would see if i could get the SNL book for a similar price, but you can imagine my shock and surprise when i saw the kindle price was $9.99!!!!! i thought to myself "you have to be kidding me...how is this possible, because, you know, the digital copy of the book, which costs $0.00 to keep on inventory should ALWAYS be less than the physical book". right? i mean, there is a cost with distributing kindle books because amazon had to invest in the network to deliver the books, but still, if there is a physical copy of the book on sale the kindle version should be priced competitively because that is the point of the kindle: books cost less (not taking into account the cost of purchasing the device itself, but once you have bought the kindle, that becomes a sunk cost and no longer factors into the cost of purchasing a book) on the kindle!!! HOW CAN THIS BE? does amazon think i am a moron? i think so...
  • the next example is from the kind folks at AT&T. recently i was shopping for a new cell phone and cell plan (thanks to the fam, i am no longer responsible for my plan and i got the sweet new blackberry tour out of the deal) so i went to AT&T to see about getting myself an iphone and what the iphone plans cost. the iphone is like a kindle, once you get it, it becomes a sunk cost. $200 for the new iphone? sure. i can do that. but the plans...the plans... $40/month for unlimited data. fine. $30/month for 450 mins with rollover. ok. but SMS delivery is where AT&T goes off the deep end and shows their utter contempt for the consumer. AT&T has a 3 tiered texting plan: $5 for 200 texts, $15 for 1500 texts and $20 for unlimited. let that just sink in for a minute. here is where the problems start. $5 for 200 texts a month is a decent deal, but who only sends 200 texts a month from an iphone? too low. the next is 1500 texts. that is a lot of texts, so if you go with that plan, you should be safe from overage charges and if you think you will go over, an extra $5 for the unlimited isn't a bad idea either, but there is nothing in the middle! the jump from 200-1500 is quite significant. what about 500 texts? or 1000 texts? these seem like more reasonable texting plans. but thats not all. lets say you go with the 1500 text plan for $15/month. texting is a data transmission. a small data transmission at that. 140 characters. very, very, very small, and for $15/month you can send a total of 240,000 characters. but what about that $40/month data plan i have already signed up for? that is transmitting HUGE amounts of data, from email to maps to apps to whatever, so why do i have to pay this OTHER data charge on top of that? ok, so SMS gets transmitted over AT&T's cell netowrk and the data is transmitted over their 3G or any available wi-fi network, but still! come on AT&T! you can send instant messages over the data network, which when sent from a cell phone is essentially a text message. see the problem here? now that cell phones can transmit all kinds of things, there is really no difference between the various kinds of messaging you can engage in. my new blackberry does email, SMS, MMS (whatever that is...i think its multimedia messaging service for pics and vids and stuff), BBM (blackberry messenger), and various forms of IM (aol, yahoo messenger, google talk). they all get funneled into the same messaging center, and at times, it is rather confusing which message is which and what service it was delivered on. the point is this: with so many messaging options enabled on cell phones what does it really matter what format it was delivered in? and this is the insanity of companies like AT&T and verizon charging for separate SMS plans on smartphones: it is a double data charge and they think they can get away with it because they think we are too stupid to realize the difference.
so now you know. don't be a rube.

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