Pricing in Action: Locks
Thursday, April 16, 2015
One of the most common pricing techniques is so widely used that few even recognize it as such. I'm speaking, of course, about locks. Yes, I'm serious. While locks are rarely (if ever) mentioned in economic textbooks (my own pricing book included), they probably should be.
Most people think that locking mechanisms are designed to stop criminals from burglarizing goods. The unfortunate truth is that there isn't a lock in existence that can stop a sufficiently trained and determined criminal. Locks stop nothing - they only delay the inevitable. In essence, locks are devices that merely increase the cost of stealing (in terms of some combination of time required, the availability of tools, training and discovery risk). While extremely weak locks present a mere annoyance to the average criminal, more stalwart options raise the price of burglary sufficiently high so as to make other targets more attractive in comparison. After all, do you think the average cat burglar will want to take the time to defeat a strong locking mechanism in a given house, when the neighbor next door has a more simplistic security device?
It's amazing how everything comes down to pricing - even when no prices are explicitly stated. Not sure how pricing affects your business? You'll certainly want to contact me for a consult!