The Price is Wrong

I drive a 1999 Nissan Maxima and last week one of my two keyless entry remote thingies stopped working.  I tried changing the battery, but it still wouldn’t work.  So, after looking at it for a prolonged period of time and willing it to open my car door, I came to the only logical conclusion – it’s busted.  While I was mildly frustrated by this, I wasn’t too upset.  After all, I’ve had it for over five years, used it to lock and unlock the car thousands of times and I have another one that works fine – it’s just nice to have two since one is always misplaced.  So, I called my local Nissan dealer and told the somewhat-surly parts department guy that I needed a new keyless entry remote for my car and asked if they were in stock.  Turns out, they were and I could have one for a cool $135.  One hundred thirty-five dollars!

This is one of those cases where an organization makes less than it wants on some things it sells and gouges the customer on other things to make up the difference.  They may only profit $500 on the sale of a car, but they know they’re going to make the money back on inflated prices for service and parts.  The problem is, I’m a loyal customer who now feels like I’m getting screwed.  So, the question is, what nets a company a better overall result – a happy customer and an unhappy customer that cancel each other out or two pretty satisfied customers, neither of whom got particularly screamin’ deals, but neither of whom feel like they got screwed either?

I understand that if you don’t profit enough on the sale of one thing, you have to make extra profit on something else to balance it out.  But, there is a price point for every product and service beyond which it just gets absurd.  Anyone who has used the van Westendorp (link is to a PDF overview) price sensitivity meter method of pricing research understands this.  The idea is to determine at what price a product or services seems inexpensive (less than you’d expect to pay and therefore a good buy), expensive (more than you’d expect to pay and enough to make you start question the purchase), too inexpensive (priced so low that you’d question its quality) and too expensive (priced so high that you’d question its value).  Within the resulting data rests the sweat spot price range.  Ignoring principles like that and simply pricing some products/services low (to make a sale) and other products/services high (to balance things out) is lazy business and doesn’t serve anyone.

As for me – I’ll use my other remote most of the time and for those occasions when I can’t find it or I left in in my other coat pocket or my son has decided to play “hide dad’s keys when he running late,” I’ll just do it old school by inserting key into keyhole and turning. Believe it or not, but that still works.  Now, what to buy with that $135 I just saved?