Same thinking here. Good overall article, but instead of losing all "price discriminators", and nothing in return, Ron is hoping to transform JCP into a retailer that caters to a different class of consumers I believe.
I for one was really impressed by JCPenney's sales, but I haven't had the need to by clothes since then (that I would find there, anyway). Could it be that the people who like honest sales spend less money?
Doesn't really explain why people STOPPED shopping there once they offered these more honest prices.
I didn't see the ad campaign, but I would guess JCP's main problem is that JCP is still a junk store that I go to to by cheap junk I need for a short term, if they win on the Internet price search.
Trader Joes never has sales, and they do great. The have. 99 prices though.
I've always wondered about the $.99 thing in pricing. Personally, I hate being manipulated by companies that believe I don't know the difference between $199.99 and $200.00. In fact, one of the reasons I went out on my own was to offer my products at a "simple" price; it costs $3,000. Period. There are no discounts, no extra fees, no price haggling, no weird $.99. Now I wonder if I'm doing myself a disservice.
Do these rules apply to software purchases? It really irks me to have to "call to get a quote" when I want to know how much a enterprise software package costs. I don't want a sales guy to call me back, I want to know how much your product costs and what the fine print says.
Am I wrong? Would you rather purchase something that you knew the price of or haggle for the best deal?
It depends on whom is making the purchasing decision. If a manager or CTO is making the purchase, and all their previous purchases require elaborate proposals as well as discounting, bundling etc, than an outlier where it's a no haggle price might make them question either the application or the company supporting it. I've personally had difficulty throughout my career in getting opensource applications approved unless there's a company behind the application willing to offer enterprise class support.
No haggle sounds great, but it hasn't been all that successful. Look at the Saturn brand, before it went under. It attracted those who dislike the traditional auto sales model, but it didn't produce a dramatic change in revenue for Saturn.
What happens when you have a non-negotiable price is that your profit margin is fixed. And for some buyers, they simply hate the idea that you're getting X% no matter what. They want to get the best deal, or more importantly, what they think is the best deal.
I wrote a greasemonkey script to round up all the 99 prices on the Apple store. It made browsing much more relaxing and made the high prices more apparent. 1999 really does trick the subconscious.
Think of the incentives for the other side of the equation: the price setter.
The product or service in question provides a different amount of value to different purchasers. Especially in the realm of software. By setting a fixed price, the seller isn't capturing extra value that they provide to certain customers (e.g., enterprise software sales).
The incentive for the shrouding is more powerful than people's desires for simplicity in pricing.
I'm convinced that this is a byproduct of Americans' inability to do maths. People seem to look at monthly prices and go based on that. They are okay with sales taxes not being displayed in stores. Cell phones and service are notorious.
Probably the best explanation is the historic optimism. If you strongly believe your personal future is going to be better then the price this month is all that matters because next month it will be a smaller part of the bigger pie you will have.
I especially like this quote:
"Socialism never took root in America because the poor see
themselves not as an exploited proletariat but as
temporarily embarrassed millionaires"
I think that Americans can do math as well as anybody, but they like being deceived, as strange as that sounds. They like the fantasy of $30/month even though they're paying $80. Furthermore, I think the people who most appreciate what JCPenney did are the people with the tightest wallets in this economy.
There are bound to be loses during the transition.