I became aware of my awesome power one day a few months ago at Home Depot.
My wife and I were buying blinds after three years of bare windows in our little bungalow. Just before I laid down my credit card, however, the customer in line ahead of me presented a discount coupon that cut 10 percent off of any purchase. "Where do I get a coupon like that?" I asked the clerk. He said they were sent out by mail. I said that maybe I should qualify for the same discount--and suggested that the chain's direct mail campaign was a form of discrimination favoring customers in "good" neighborhoods over folks like, well, me. He sent me to talk to a manager, who explained that I was wrong. The coupons, he said, were targeted according to demographics and tied to Zip codes.
"You're making my point," I said. But before I could launch into a harangue about the evils of upscale marketing, the manager shrugged and looked over at the young man working the cash register. "Steve? Give this man 10 percent off."
This is not a homily on the power of positive whining. And I'm not trying to portray myself as some kind of super shopper--believe me, I'm not. All I did was stumble into a revolution: the end of fixed prices.
No, I've not taken leave of my senses. Yes, I know that you can walk into any drug store and see the prices stuck right there on the shelf above the toothpaste and shaving cream. But in many sectors of the nation's economy, businesses have let prices slip from their moorings, creating both opportunities and inequities in the marketplace. It's not hard to find examples:
* A former colleague was outraged to see a $33 charge on his bill for a 22-minute call to his in-laws in Greece. His old long distance company charged 35 cents a minute for the same call. When he complained, Mike was stunned to find that the operator was eager to credit the cost of the call--and even to switch Mike to a cheaper long distance plan that did cost 35 cents per minute for calls to Greece.
* Whenever my buddy Doug makes reservations at a hotel, he pulls out a billfold fat with coupons and discounts tied to his credit cards, frequent flyer programs and more. He never books at a regular rate. When he arrives at the hotel, he always asks, "Is this the best we can do?"--and often shaves even more off the price.
* Another friend gets his cholesterol tested and sees two prices on the statement of benefits that he receives from his health insurance company. One is the "Billed Charge" for the test: $55.50. The other is the price the insurer has negotiated with the lab: $9.98. He marvels at the steep discount--or is it a 550 percent markup?--and wonders about the unfairness of a system in which the uninsured pay the highest price.
So what is the real price of that blood test, that hotel room, that phone call? Answer: There is no real price. Welcome to America, the negotiable.
Sound great? For many of us, it's consumer heaven. But I've got a feeling that it will end up plunging other folks into consumer hell, or at least purgatory. There's no small measure of comfort and stability in the traditional retail relationship; a pricing free-for-all could turn the marketplace into a roller derby.
The old ways provided some protection for people too timid, or not nimble enough, to bargain well: they didn't get fabulous deals--but they rarely got taken, either. In the new world, the meek may inherit the earth, but the sharks will probably end up buying it out from under them. Oscar Wilde once said that a cynic is a man who knows the price of everything and the value of nothing; in today's less certain world, we need to rephrase Wilde's epigram: If nothing has a price, does anything have a value?
American consumers have long accepted that there is no fixed price when it comes to shopping for cars, homes or home improvements. Sticker prices are merely opening bids. Negotiation is expected. Now, it seems, meaningless prices are popping up everywhere: on health care services, prescriptions, consumer electronics, phone services and hundreds of other items. And don't get me started on college tuition, that illogical economic model in which the seller advertises the highest possible price, then quietly offers discounts to large numbers of its customers.
Consumers today are expected to be much more sophisticated than in the days when collecting Green Stamps and clipping coupons was all a savvy shopper needed to do to save a few bucks. "Predictable, fixed prices are a thing of the past," said Edward Yardeni, an economist at Deutsche Bank Securities. He explained that more and more companies are setting prices for their goods and services the way airlines have priced seats for years. Wanting to recoup the cost of seats that would otherwise go empty, airlines began to offer steep discounts to fill them. Consumers found that the more they knew, the more they saved. Knowledge greases the gears of the market, making everything run more efficiently.
Yardeni attributes a big part of the change to the Internet, which gathers information and spreads it more rapidly than any other medium. Online customers can comparison shop for countless goods from retailers worldwide. We can buy and sell products and services at eBay and other auction sites. Until recently, you couldn't negotiate the cost of your airline ticket; you simply shopped around to take advantage of wild price swings. Now you go to Priceline.com and name your price--and if there's a company that's willing to match it, you strike a deal, no whining necessary.
"The Internet is the world's first market that comes as close as you can imagine to the theoretical model of perfect competition," Yardeni told me. "The one item that Internet gives away for free is information. In the past you had to pay a lot of money for that information."
Of course, the Internet isn't the only thing freeing prices: The cost of doing business in many industries has changed, and that gives companies more wiggle room. Take Mike's expensive phone call. The advent of technologies such as digital networks allows companies to offer more services at lower cost than ever before. That's why your cellular company--eager to keep your business--might throw in voice mail, paging and a first free minute on incoming calls. It also explains why, much of the time, if you call with a complaint, the person on the other end of the line will remove the charge. The most important thing, a representative of a cellular company told me, is keeping the lucrative, phone-using customer happy, even if it means tossing some incentives his way. "It's not like the old model [of prices], where you dropped a quarter into a pay phone and you've got XYZ minutes."
The telephone companies are struggling with the same problems as industries such as software and computers: They have to come up with prices that make sense when the costs of developing the products (laying the fiber-optic cable, writing the software, designing the chip) are high, but the costs of producing the products (the call, the disk or the chip) are low. "If the Intel chip costs three dollars to make, you can make money selling them for four dollars," explains University of Texas economist R. Preston McAfee, a specialist in auctions, "but you could never afford to design one." That reveals a risk in the flexible economy, McAfee said: Competing on price alone "will bankrupt you and your competitors." That's why some online retailers are opting out of those Web sites that compare prices, and are trying to distinguish themselves by offering ease of use and greater selection.
A lot of folks aren't comfortable talking about the shift. One well-known economist I called didn't want to be quoted on the record, saying that he had no empirical data to back up the idea that prices have gone floppy on us--even though, he noted, "certainly there's a lot more flexibility in terms of prices." He even reminisced, without prompting, about how "when I grew up, you went into a store, whatever was marked, that was it!"
And, predictably, my source at the phone company didn't want his name or company used--why advertise discounts for the taking?
As much as we appear to be racing into the future, we also seem to be heading back to the past--to a time when haggling and bartering were the norm. Fixed prices emerged in the United States during the 1800s as general stores broadened the divide between the people who made a product and the people who sold them, McAfee said. Fixing prices for, say, guns was a way to ensure that the manufacturer got full value for his goods even though he couldn't be everywhere that the guns were sold. Negotiation persists in many countries--I sharpened my skills on family trips to Mexico, haggling for a better deal on guayabera shirts and stuffed frog statuettes. In many ways, we're coming full circle.
So here we are, with new opportunities and new burdens. The motto of the old days of fixed prices was caveat emptor: buyer beware. The new age calls for a new slogan: buyer be aware.
Does all this sound exhausting? It can be. Who wants to be on the prowl constantly? No wonder companies like CarMax are going in the other direction, and offering shoppers the comfort and simplicity of a fixed price.
And, I should confess, for the most part I'm a terrible shopper. I'll save money on my blinds, but blow it on my groceries. I don't consistently look for that great deal. My wife jokes that I'm really in it for the remorse, since much of the time I don't pay close attention to prices until after I've made my purchase and see what other stores are charging for the same item.
But it's more than that. I get tired of bargaining. Maybe it's a guy thing. Maybe it's a desire to go through life without seeing every purchase as a duel, and every salesman as an adversary to best. Maybe it's a desire to live life, and not just live to shop. Maybe it's a little like what that character in "Citizen Kane" said: "It's no trick to make an awful lot of money if all you want is to make a lot of money."
John Schwartz is a reporter on The Post's Financial staff.