One of the most scorned and disdained – and least understood – pricing strategies is employed by the airline industry, illustrated by this anonymously authored email about purchasing house paint, circulated in Australia where Qantas has a large share of the market:
First, a reprise of how ordinary hardware stores sell paint:
Customer Hi. How much is your paint?
Salesman We have normal quality paint for $18 a litre and premium paint for $25. How many litres would you like?
Customer Five litres of normal paint please.
Salesman Great. That will be $90.
Now, imagine you are buying paint from Qantas: First you spend days trying to reach them by phone to ask if they have paint. Nobody answers. So, you drive to a Qantas store.
Customer Hi. How much is your paint?
Salesman Well, sir, that all depends on quite a lot of things.
Customer Can you give me a guess? Is there an average price?
Salesman Our lowest price is $12 a litre, and we have 60 different prices up to $200 a litre.
Customer What’s the difference in the paint?
Salesman Oh, there isn’t any difference; it’s all the same paint.
Customer Well, then I’d like some of that $12 paint.
Salesman When do you intend to use the paint?
Customer I want to paint tomorrow. It’s my day off.
Salesman Sir, the paint for tomorrow is the $200 paint.
Customer When would I have to paint to get the $12 paint?
Salesman You would have to start very late at night in about 3 weeks. But you will have to agree to start painting before Friday of that week and continue until at least Sunday.
Customer You’ve got to be kidding!
Salesman I’ll check and see if we have any paint available.
Customer You have shelves FULL of paint! I can see it!
Salesman But it doesn’t mean that we have paint available. We sell only a certain number of litres on any given weekend. Oh, and by the way, the price per litre just went to $16. We don’t have any more $12 paint.
Customer The price went up as we were talking?
Salesman Yes, sir. We change the prices and rules hundreds of times per day, and since you haven’t actually walked out of the store with your paint yet, we have just decided to change. I suggest you purchase your paint as soon as possible. How many litres do you want?
Customer Well, maybe five litres. Make that six, so I’ll have enough.
Salesman Oh no, sir, you can’t do that. If you buy paint and don’t use it, there are penalties and possible confiscation of the paint you already have.
Customer WHAT?
Salesman We can sell enough paint to do your kitchen, bathroom, hall and north bedroom, but if you stop painting before you do bedroom, you will lose your remaining litres of paint.
Customer What does it matter whether I use all the paint? I already paid you for it!
Salesman We make plans based upon the idea that all our paint is used, every drop. If you don’t, it causes us all sorts of problems.
Customer This is crazy!! I suppose something terrible happens if I don’t keep painting until after Saturday night!
Salesman Oh yes! Every litre you bought automatically becomes the $200 paint.
Customer But what are all these “Paint on sale from $10 a litre” signs?
Salesman Well, that’s for our budget paint. It only comes in half-litres. One $5 half-litre will do half a room. The second half-litre to complete the room is $20. None of the cans have labels, some are empty and there are no refunds, even on the empty cans.
Customer To hell with this! I’ll buy what I need somewhere else!
Salesman I don’t think so, sir. You may be able to buy paint for your bathroom and bedrooms, and your kitchen and dining room from someone else, but you won’t be able to paint your connecting hall and stairway from anyone but us. And I should point out sir, that if you paint in only one direction, it will be $300 a litre.
Customer I thought your most expensive paint was $200!
Salesman That’s if you paint around the room to the point at which you started. A hallway is different.
Customer And if I buy $200 paint for the hall, but only paint in one direction, you’ll confiscate the remaining paint?
Salesman No, we’ll charge you an extra use fee plus the difference on your next litre of paint. But I believe you’re getting it now, sir.
Customer You’re insane!
Salesman But we’re now THIS COUNTRY’S only paint supplier! And don’t go looking for bargains! Thanks for painting with Qantas (R. Baker, Pricing on Purpose, 2006).
And if not enough customers buy our paint and therefore don't make any money we can always get a government bailout.
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