Price Discrimination. Perhaps you’ve heard of it – maybe not. Perhaps you’ve been a victim of it, and you were unaware, or suspected so. This article takes a practical look at this issue and what you can do to avoid it.
What is price discrimination?
I usually avoid clinging to definitions for every article like you see a lot on the web. Frankly, you can find them yourself in two seconds via Google. But as this is a technical, economic term, this is an exception. A succinct definition from Tutor2U I like is:
“Price discrimination happens when a firm charges a different price to different groups of consumers for an identical good or service, for reasons not associated with costs of supply.”
Businesses such as yours reach out to find a professional to provide a service, say building a website. The agency or freelancer will do some research into the value, profit and size of your business. Based on this, they will try to think of the highest cost they can possibly charge you. Thinking that “it’s okay, they can afford it”. The same person may have recently done the same size and complexity project for one of their other clients, at a lower (sometimes drastically) cost. This means you are paying more than others for the same service.
Other examples may include having your car serviced or valeted. A mechanic may charge you more for a job based on their impression of you from the kind of car you drive and line of work you are in. They make take advantage of your lack of knowledge into cars and charge you more than the job is worth. This is a common factor – when you depend on an expert to provide a service but are unable to determine what is a fair price or not. Yet, you should be able to trust a professional to offer a fair and competitive price based on the work involved, not to extort you.
Why do people resort to price discrimination?
Whilst there may be studies getting scientific about the psychology underlying this, we can point to one sure factor: greed. Not every person comes into business with their customer in mind. Some people misunderstand business as an opportunity to rip people off. Unfortunately, your business success and the brand you’ve worked so hard to grow to where it is today could be a target for these rogue traders. Others may say that some agencies and freelancers might increase the price they ask you to pay to give the impression of how worthy they are based on their experience and knowledge. Thankfully, there are a few ways you can try to avoid this.
How to avoid price discrimination
Some businesses make it easy by offering fixed pricing. This is what I do, and you can check out my prices here. Whilst not every business or sector can practically offer this, look for providers who do. Fixed pricing forces professionals like me to seriously think about what is involved in a project and to think of a fair price from the get-go. This means the price you see, and that I ask you to pay is the same for everybody with your requirements. And those requirements are fairly discussed at your Initial Consultation where we meet to talk about your project.
Your price as a result, is directly determined by a mutually agreed discussion of what you need. This is one way to avoid price discrimination. For services where fixed pricing is not possible, or available (most website developers don’t offer fixed pricing) there are other practices you can try.
Ask around for recommended providers
Talk to your family, friends, employees and partners to see if they know anybody trustworthy who might work with you on desirable terms. You might even be able to negotiate a special discount in the process.
Check out reviews online and engage with past customers
See what people are saying about the firm or freelancer you are considering. The internet and particularly Google Reviews and social media pages give people a platform to voice their true unfiltered opinions. And whilst they might not have known it at the time, if and when they later discover they were ripped off they are usually quite open to sharing that fact. Reach out to people who left reviews on sites such as Revoo if possible, to ask specific questions you have, you might get a response from a real customer.
Phone around and ask for quotes
Don’t be afraid to reach out to multiple providers and talk with them until you get a quote or proposal. Play them off against one another and make them work for your business by seeing who can do it the cheapest.
How I personally avoided price discrimination
A personal experience of this was when I had an issue with my car. I called a local mechanic who quoted £150 alone in labour, plus £150 for a part to have a job done. I sourced the part myself online for £100 brand new and called around. My first call was to the car manufacturers local dealership, expecting it to cost a multiple of the price my mechanic quoted.
They quoted £35 for labour – that’s one hour. Alarm bells rang in my head – since when would a dealer charge less than an independent mechanic?! I phoned my mechanic back and mentioned what the dealer told me about it being an under one hour repair. He still insisted it took much longer and now was actually lying directly to me.
In this situation, he heard a young person calling for a quote and tried to rip him off. Thanks to calling around, I was able to avoid being extorted. It really works!
Be smart about who you work with – not everybody is a true professional
So, in summing up, make sure you compare and opt for businesses that are openly working hard to gain your business. That’s with making it clear exactly what they can and will do for you and for how much. Look for fixed pricing – such as that which I offer on my Website Packages. With a little bit of common sense and time, you can stay safe against rogue traders as you manage your business.
Remember if you’re looking for a web developer in Northern Ireland, that I offer clear Website Packages and Fixed Pricing which you can check out right now. You won’t pay a penny more for the same job than any other client of mine. I also offer you other unique opportunities such as One-to-One Training for you and your staff to help you get the most from your new website and other handy extras like Basic Documentation. It’s all about giving you everything you need to make your life easier whilst doing a job that you and I can be proud of at a fair price. Business 101. When you’re ready to talk websites, talk to me!