2. When I got off the train, coming cack from Torino, slightly tired, I
nevertheless noticed a more than ever present number of
advertisements, presenting women very lightly dressed and
« promoting » (pro-movere) in every sense of the word their physical
attributes and the tiny pieces of garment which barlely hid them. It
came to my mind that Valentine’s day was close; and bingo, here it
was. Once home, with a total lack of imagination, I outsourced a
supply task to my 2 young daughters: hunting for « some » flowers
I gave them 30 euros and they came back with this skinny bunch (see
opposite). They said that they had paid 27 € for « that » and my first
remark was to say:« It’s a scam! ». Even worse, I may have said: « You
have been cheated! ».
When they added, that they got almost the last flowers that were
there, it triggered that small meditation on prices and costs (one of
my favourite subjects as you know).
3. The price of roses on Valentine’s day is much higher than any other day. Yet, during that day, the sales of roses skyrocket.
We could consider it as an example of positive price elasticity. Does the higher price encourage people to buy more
because the higher sacrifice is a measured evidence of their love?
Some clients want to distinguish themselves and are ready to pay a lot to do so (although you don’t distinguish much
yourself by buying roses on Valentine’s day as « everyone », including me, does it). It is known as the Veblen’s effect.
You could say also that the price goes up because of the high demand, which means it is the « pulled volume » that
impacts the price, sending a signal of scarcity, which might encourage people to buy by fear of not getting anything.
Some justify the price increase by an increase in cost incurrend by the various agents. I include a rationale on cost
presented by an online flower sellers, Teleflora. I found similar causal explanations in a Reuter’s article
(http://www.reuters.com/article/us-usa-retail-roses-idUSBREA1514620140206). The article explains that all the roses are
not alike, even though it is difficult to appreciate the quality of a rose such as longevity beforehand. Hence, the apparent
quality and corresponding price seem to be based on the length of the stem…
To conclude this Zeitgeist article, I discovered a website beyondcostplus.com, which is a website about pricing, presenting
illustrative examples of businesses which try to capture the value, dissociating it from costs incurred. They make an
interesting development about price elasticity. Amusingly, this site is financed by: