So much for quantity discounts

I was up with my family at the Wisconsin Dells last week. The water park we were staying at offered hair braiding for children on the following price schedule:

3 braids: $10.

6 braids: $22.

Each additional braid: $4.

This is a very unusual pricing schedule, to say the least. Rarely do you see a product priced so that each additional unit you buy is more expensive than the first ones. There are lots of good reasons for this.

First, the cost to the supplier of providing one more unit to a customer is usually lower. For instance, a big chunk of the total time braiding my daughter Olivia’s hair was in deciding what style of braids to do, getting her seated, etc. The actual braiding was quick.

Second, economists typically think that the marginal benefit consumers get from a product declines the more they have it. In other words, the first braid my daughter gets is more valuable to her than the 99th. Which means pricing with quantity discounts makes sense.

Third, if the same consumer can buy the product more than once, then they can buy 3 braids at a time, effectively getting 6 braids for $20 anyway in the example above.

Fourth, if there is no good reason why the last braids should be more expensive than the first three, then it makes consumers mad that the last three are more expensive.

The hair braiders were unfazed when challenged with these various arguments by my wife (who is not an economist, but has learned to think like one). They said it was fine if my daughter wanted to get 3 braids now and come back later to get the next 3 at the lower price, but they wouldn’t give her 6 braids now for $20.

I unfortunately missed the exchange because I was taking our youngest daughter Sophie to get a temporary tattoo. Inexplicably, out of almost 100 options she settled on a Jim Morrison tattoo. I managed to talk her into a tiger just in time. The tattoo people had a much better handle on pricing: The first color was $5 and each additional color added to the tattoo was only $1 extra.

By the way, my daughter Olivia’s six braids looked great, although hardly a bargain at $22.


chk

Could this be a (perceived) customer service issue? 6 braids take twice as long as three braids. This means that potential customers need to wait longer, and will give up?

In other words, you're paying the cost of "scaring away" future business.

I'm not saying it's logical, but it occurred to me, so it may have occurred to them...

matnet

On a book of Serge Latouche, i read once the story of a Mexican artisan selling chairs. A rich American saw one of them and asked for the price. Thinking the price was a real deal, he asked the craftsman for six of them. The artisan then said it would cost him much more than six times the initial price. The american thought it was foolish (much the same way you felt i guess) and asked a reason for it. The artisan answered it needed to be paid more to cover the boringness of replicating six times its work and mortifying its creativity. So much for the economies of scale.

rob lewins

Is there a time & motion issue for the park operators here?
Maybe your Dollar per minute spending on braiding is less than a couple of quick tattoo's or burgers & coke for 6?

How come there was no mention of a sliding scale for shoulder length hair vs waist length hair?

simper5

There's an easy answer to this, I think: they wanted to advertise a low base price as a hook, and $10 is an even and fairly low number. Once you're in, however, they know that you'll pay a little to save yourself waiting in line again when you're spending half the day doing that anyway. Another way to make the point is to say that the $10 price is meant to get the parents' permission to put the child in the seat, but they know that most kids will want six braids when they see three, so by the time you consider the additional $12, they've got you well on the way to the sale already.

In your case, the gambit seems to have been entirely successful: they confirmed that you could save $2 by making separate purchases, and you paid the extra money anyway. I don't see how your story is anything but a thorough vindication of the pricing schedule.

minderbender

Are all braids the same? Because it seems to me that when you get a lot of them, each one must be small. It might just be harder to make small braids than big ones.

Rob

It is simple: more braids look cooler than fewer braids, and no kid wants to look un-cool with just 1 or 2 or 3 braids and have to wait in line to get the rest of their braids to complete the look (opportunity cost of missing more rides or whatever). Would you have felt just as miffed if the braider had only advertised a single package of 7 braids for $26? How many triply-braided kids did you actually see at the fair?

unknownprofessor

I think simper5 is onto something, and illustrates a basic principle of pricing. Unless you have a perfectly competitive and frictionles market, costs will not totally drive prices. Prices are always based on willingness to pay, which is above cost if there aren't competitors willing to undercut.

In addition, in this case there are are costs to the consumer from breaking the purchase into parts - both the cost of waiting in line and the costs of hearing your kids complain.

So, the braiders priced accordingly.

sophistry

If one has to wait in line to get the second set of braids to save the $2 then it's pretty much analagous to financial markets. People who are patient won't have to pay the bid-ask spread, while those who are not may very well pay much more than the bid-ask spread.

rims

In the land of theme parks there is no chance for repeat business, so it makes sense that people who really like braids and people who dont want to be hassled get to pay more

mathking

minderbender is also on to something. Having watched the weekly struggle as my wife braids my daughter's hair (my daughter loves the braids, but hates the process of braiding), it is in general harder to do more smaller braids. The braiding is more intricate and it takes time to get them sized correctly.

Max Buten

Your wife was fazed, not phased.
Perhaps you were studying economics when I was learning to spell?

culley

You've missed the obvious.
There is a limited quantity of hair.
The more braids, the less hair left to braid with, the more difficult to add additional braids quickly and easily and cheaply.

Brian77

Max: Surely you mean the hair braiders were unfazed rather than unphased! Perhaps you were learning to spell when others were learning to read properly?

onlineoddities

While all the above theories seem to be good explanations isn't there some possibility that this was some sort of signage mix-up or mistake by the vendors or water park? I mean it doesn't seem to me like the proprietor of a braiding stand would really be thinking this through that much and it would seem logical for whoever was running the stand that day to stick by the posted prices as is their duty.

MM01

> she settled on a Jim Morrison tattoo. I
> managed to talk her into a tiger just in > time.
They are two more interesting observations for me here.
a) what made her choose the guy? It's not 60's anymore, Chicago doesn't seem to have many flower people, and she is a bit too young to know him in her daily life.
b) what is the problem to have your daughter temporarily go with JM tatoo? Is he a bad guy now?

zbicyclist

Question for Max Buten: Which pays better, economics or spellling?

toml

It's also possible that the vendor is just not good at math. I once worked for a man who balked at offering a 10% off sale, deciding instead to have a "buy one get one free" sale.

amotiwalla

The hairbraider was planted there with her pricing just to infuriate economists.

dpoon

Is there a queue for the service? (Pardon the pun.) Perhaps they can make more happy customers by keeping the waiting time short.

Bruce Hayden

Slightly off topic, but I am still amazed at all the supermarkets going to a 10/$10 pricing instead of $1 each, which is what you pay if you only buy one.

Maybe it is a way for people to think they are getting a deal, when they really aren't.