Charging philosophy

[Chris J]

There are all number of ethical, moral, commercial, political and social arguements mixed in here, and of course the are no actual answers or solutions, only opinions.

There is an old story attributed to Winston Churchill (and I get relevant in a second, stay with me). It goes along the lines of: Churchill asks the lady if she would sleep with him for £1,000,000 to which she replies that she would. He then asks if she would, for £10. She says she would certainly not. To this, Churchill comments that he has already established what she would do, they are now just haggling over the price.

The point I want to make is that there is a crossover point from one point of view to another. That crossover point varies for each of us.

If I look at the business I am in. I am a doctor in UK. Medical services here are free at the point of delivery. If I had to pay for the actual service I get as a customer, thankfully I would spend hardly any money at all. If my wife would have had to pay, she would have been bankrupt or dead by now.

I actual fact, ignoring it is an insurance scheme, everybody pays the same amount and some get more for their money than others.

There is more, but a patient has arrived and I need to see them!......

Chris

 

[tictactux]

I actual fact, ignoring it is an insurance scheme, everybody pays the same amount and some get more for their money than others.

The problem with this system is that, at some point, those who "get less" for their money will visit the doctors more often in order to "get something for their money". This thwarts all attempts at lowering the general healthcare bill. But I digress...

 

[pete]

If a repairer has fixed prices and relies on some repairs to "average" i.e. make more for the shorter repairers and less for the longer repairs, then that's exactly the problem I described. Some customers are paying for the work of others. I hope it is (finally) clear?! If someone doesn't see that this is a problem then what can I do, but I think it is a bad approach.

In actual fact, ignoring it is an insurance scheme, everybody pays the same amount and some get more for their money than others.

The problem with this system is that, at some point, those who "get less" for their money will visit the doctors more often in order to "get something for their money". This thwarts all attempts at lowering the general healthcare bill. But I digress...

You're all talking about essentially the same thing, but clarnibass has the best summary.

I think you could easily have a business that does split prices that way and that way is probably the most common with insurance. I'd actually say that the insurance industry relies on it. It really doesn't matter what kind of insurance, either.

If I pay my insurance premiums every year and die at the anticipated age of 94, my life insurance company isn't going to have to pay out much, especially if you consider that I've been paying premiums for (possibly) 94 years. If I die next week, they'll have to pay out a lot.

In retail, you might drastically mark down an "expensive" item to a point where you're either making no profit or very little profit just so you can attract customers. Hey, I know that there are studies that say that if you get the customer in the door, he's likely to walk out with some purchase.

As pure techie, the only way that this kind of scenario would work is how I mentioned above: I charge you $75 for the 1 hour diagnostic. I tell you that it'll take several hours to repair, but it won't need my constant supervision, so I'll cut you a deal.

But that's essentially the only way it'd go down, because you're starting to get into parts. You can do lots of stuff with inventory.

 

[Chris J]

The insurance scheme mentality has some relevance here.

If a tech has (getting back to the actual scenarios) has a loyal and regular customer base they may appreciate a flattened rate.

Working almost like an insurance scheme, if the high charges are clipped down and the low charges boosted up, both into a mid range deemed reasonable by the client, then that might mean the client is likely to return.

Where as, if in the examples given, the discussion is always about different clients, the charging may seem unreasonable (though quite egalitarian).

But if you add the possibility of a customer returning a few times, then it may feel fair and quite advantageous, as if you have had a couple of repairs that took ages and were not highly charged, to have another couple of repairs that were also charged in a similar order, though the basic rate may have been a bit more than necessary - well total repair cost commitment has been ironed out over time and may have meant the difference between an instrument staying in repair, and one deemed to be uneconomic to have repaired at one stage.

Don't get me wrong. I think the honest and logical way forward in service provision is for a service provider to be faced with a request, and the service provider assesses the work involved, undertakes the work and charges accordingly. The initial quote should be honoured unless something really significant and unexpected arises - then a discussion with the customer is initiated.

But I do find the debate around alternative commercial models interesting

Chris

 

[pete]

I, of course, vote for any model that involves people sending me cash, check, money order or seldom used horns.

We could also talk about how much to charge, period, for anything. I've mentioned elsewhere that a Chinese company once approached me to sell their horns. I'd buy them at X price and sell them for 2X or more, according to their pricing schemes. I'd assume that I could charge 2X + all my other costs associated with running that business and I'd still be making lots of $, if the advertised prices of today's Chinese-made horns is any indication.

I'm neither a Communist nor someone that walks around in rose-colored shades, so I understand that you get into any business to make money, but how much profit do you want before your conscience starts nagging you? Hey, I'm very comfortable saying that I'm worth that $75 an hour because I will do a better job than anyone that charges less than me. Hey, what if I can do a job in one hour that would take someone less skilled three hours to do at $40 an hour? I'm a bargain. And I happen to know, comparing myself with the dozens of techs over the years, that I can do a lot of things faster and better than they can.

(Complete aside: in several of my computer certification exams, I was asked a single question -- and the popular rumor is that if you answered this question wrong, you immediately fail the exam. The question was in the form of, "Are you a good, qualified computer tech?" The multiple-guess answer was in the form of, "I'm the best tech the world has evar seen!!!111one".)