Getting Married? Then Get Ready for Price Discrimination
A reader named Elliot Millican writes in to say:
At one point in SuperFreakonomics you mentioned a particular brand of hair clippers that are offered for humans and for pets. You noted that the human clippers carried a higher price even though they appeared almost identical. You went on to say that the pricing scheme is a simple result of the consumer’s willingness to pay more for their clippers than they would their dog’s. [Yes indeed: this is known as price discrimination.]
These hair clippers reminded me of something I experienced when my wife and I were engaged (8 years ago). Let me quickly give the background: due to limited wedding budget, we had our wedding at church and a reception at the church with cake, punch, and light food. This allowed us to invite as many people as we wanted because the church was free and the cake/food prices weren’t terribly expensive. But we had a second reception just for family and wedding party at a hotel (for about 60 people). This second reception was more like your traditional wedding reception… open bar, sit-down dinner, and a DJ. In short, it was expensive, but affordable with only a fraction of the guest list.
While still engaged, we attended a wedding for some friends. We really liked the DJ at their reception so I approached him and asked about availability and pricing. He quickly stated that he charges a minimum of $500 for wedding receptions, and the price goes up if it’s more than 3 hours. So I responded by saying that we needed him for music at a family dinner after our wedding reception, not for the reception itself. I made it clear that no cake would be served, no tossing of the bouquet, etc. Just dinner and dancing. Without negotiating, he dropped the price to $350 for a 3-hour reception.
My wife and I were enlightened. We were no longer planning a wedding. We were planning a party. You pay at least a 25% premium for anything that has to do with a wedding. The major expenses we saved money on were flowers, food, DJ & the reception hall at the hotel. Apparently, the wedding industry knows that couples are prepared to spend money on their wedding, so they help the bride and groom in that endeavor.
I don’t know if there’s been any empirical work into price discrimination surrounding weddings — hey econ grad students, pay attention! — but here’s a short investigation from an Australian consumer watchdog that finds higher prices for the venue, photographer, cake, flowers, etc., once a wedding is being involved. I can only think of one activity that’s more prone to price discrimination: funerals.