After shrinkflation comes sneakflation. Now you’ll be charged for heat in your car seats, ice in your drink, a for a cone for your ice cream. In the old days, you could see the price changes. Now the algos and dynamic pricing mean you can’t see the price hikes till it’s too late. Meet sneakflation.
Excellent - all this is true and consistent with the concept of “consumer-as- prey” mentality that has seen gouging as a normal business practice. I see a significant opportunity for businesses with a strong customer focus to engage in “honest pricing” and moving away from the “SaaS everything” model with which many are simply disgusted.
Speaking of sneaky illegitimate offspring of unknown father's. I recently had to have some dental work done. And implant. The initial charge I was quoted was in the neighborhood of $5,000. Of course the dental insurance I have does not cover that. So I decided to get some additional pricing options. Some of the dentist wouldn't even talk to me unless I came in for an appointment and they would charge me $125 to $250 just to talk to me. In the end for an implant I got price ranges between $3,000 and $5,000 for what's essentially the same thing. Dental tooth implant. Getting prices from dentists and doctors is nearly impossible in advance. And when people are ill or in pain they don't really question it. So when you get the bill it's an MFer.
One of the main causes of bankruptcy in America is Medical bills. And if you hide the prices in advance and hit people when they're in pain and not really concerned about anything but alleviating the pain, it turns into a real racket. I should also mention the study showed that life expectancy in the United States, while having the highest medical cost per capita, also have the lowest life expectancy in the industrialized nations. So we have a real problem here. I'd be interested in getting any feedback.
addendum:
Medical tourism. I also looked at flying down to mexico for dental work. I recall my grandparents in the 1950s driving down to Juarez for dental work.
after adding in transport and hotels and etc, the amount saved would be minimal for the effort involved.
I did find out that there is huge medical tourism to countries like Mexico and India, so if you got some serious out of pocket work that needs to be done, check that out as well.
👍👍☺️ always great to read your wonderful missives...As far as inflation goes, the silver lining is the information content ythat these signals send to producers, consumers and money/credit creators ( banks & CB's). Competition & entrepreneurship will win at the end of the day.. that much I am quite certain ✌️
Was in NY last week for 2 nights. Stayed at a Hilton Garden Inn in midtown. I am a lifetime Diamond member. What was a free breakfast in the past, is now a $10 credit, which would cover part of a breakfast. Came back after my first day of meetings. My room was not touched. Went downstairs to go out for dinner and asked why my room had not been cleaned/made up. Was directed to a sign that said you had to request room cleaning the day before.
more seriously, every business in our area - restaurants were the first - first started adding an extra fee if you used a credit card. This was on top of the price increase they all instituted. Then they started refusing American Express with it's largest-of-all costs to the businesses. Between price increase, some restaurants still with extra covid fees and now fees to use credit cards, prices have skyrocketed. All this has been a windfall for servers for the time being as most customers continue to tip the same percentage of the check's bottom line. I suspect the long trend up from 15% being usual to 20% and 20+% is going to reverse.
As you probably know, Heathrow now charge a £5 surcharge for simply dropping somebody off outside the airport (not parking). I think this was a post-pandemic attempt to recoup lost cash flows. Either way, I'd put it into the sneakflation category.
This is brilliant! Also probably a cautionary tale to those expecting corporate margins to compress dramatically. Most have probably figured out how to pass it through.
Blatant version of "drip pricing" -- If you subscribe to the digital New York Times, you get access to only some of the publication. Although the front page prominently features images and links to New York Times Cooking and Wirecutter, reading the articles at those links requires you to purchase a separate subscription.
And therein lies why I’ll try to keep my 2007 diesel pickup until I literally die. No “add-ons”, no need for DEF in my model year, technically still only 1/2 way to “end of life”.
There is a difference in charging for once free luggage space and more leg room on a limited flight and heated seats. The marketer in me says 'short' the stock. They are creating a barrier to ownership; instead BMW should be paying $20 a month and gathering all the user data they can acquire in order to create a better 'experience'. Which do you think a consumer is going to be more proud of.... BMW pays ME.... vs., those motherf*ckers want to charge me $18 ..... Geez, every car company should absolutely crucify BMW. This big brother bovine scatology is going the way of the dinosaur....
My 15 year old came home the other day saying, “Mom, people are suddenly talking about shrinkflation like they’re uncovering a new thing.” The kid is interested in all things geopolitical and economic so I’ve been sharing your writing with him for YEARS, so of course he heard the term and the idea some time ago. :)
Excellent - all this is true and consistent with the concept of “consumer-as- prey” mentality that has seen gouging as a normal business practice. I see a significant opportunity for businesses with a strong customer focus to engage in “honest pricing” and moving away from the “SaaS everything” model with which many are simply disgusted.
Speaking of sneaky illegitimate offspring of unknown father's. I recently had to have some dental work done. And implant. The initial charge I was quoted was in the neighborhood of $5,000. Of course the dental insurance I have does not cover that. So I decided to get some additional pricing options. Some of the dentist wouldn't even talk to me unless I came in for an appointment and they would charge me $125 to $250 just to talk to me. In the end for an implant I got price ranges between $3,000 and $5,000 for what's essentially the same thing. Dental tooth implant. Getting prices from dentists and doctors is nearly impossible in advance. And when people are ill or in pain they don't really question it. So when you get the bill it's an MFer.
One of the main causes of bankruptcy in America is Medical bills. And if you hide the prices in advance and hit people when they're in pain and not really concerned about anything but alleviating the pain, it turns into a real racket. I should also mention the study showed that life expectancy in the United States, while having the highest medical cost per capita, also have the lowest life expectancy in the industrialized nations. So we have a real problem here. I'd be interested in getting any feedback.
addendum:
Medical tourism. I also looked at flying down to mexico for dental work. I recall my grandparents in the 1950s driving down to Juarez for dental work.
after adding in transport and hotels and etc, the amount saved would be minimal for the effort involved.
I did find out that there is huge medical tourism to countries like Mexico and India, so if you got some serious out of pocket work that needs to be done, check that out as well.
👍👍☺️ always great to read your wonderful missives...As far as inflation goes, the silver lining is the information content ythat these signals send to producers, consumers and money/credit creators ( banks & CB's). Competition & entrepreneurship will win at the end of the day.. that much I am quite certain ✌️
Hi Pippa,
Was in NY last week for 2 nights. Stayed at a Hilton Garden Inn in midtown. I am a lifetime Diamond member. What was a free breakfast in the past, is now a $10 credit, which would cover part of a breakfast. Came back after my first day of meetings. My room was not touched. Went downstairs to go out for dinner and asked why my room had not been cleaned/made up. Was directed to a sign that said you had to request room cleaning the day before.
my brother's wife has instituted a nightly "resort fee" if he wants to sleep in their bed together....
....and yes there are other new, unmentionable fees too
more seriously, every business in our area - restaurants were the first - first started adding an extra fee if you used a credit card. This was on top of the price increase they all instituted. Then they started refusing American Express with it's largest-of-all costs to the businesses. Between price increase, some restaurants still with extra covid fees and now fees to use credit cards, prices have skyrocketed. All this has been a windfall for servers for the time being as most customers continue to tip the same percentage of the check's bottom line. I suspect the long trend up from 15% being usual to 20% and 20+% is going to reverse.
Hi Pippa,
As you probably know, Heathrow now charge a £5 surcharge for simply dropping somebody off outside the airport (not parking). I think this was a post-pandemic attempt to recoup lost cash flows. Either way, I'd put it into the sneakflation category.
Airlines are soon going to charge to use the bathroom....
This is brilliant! Also probably a cautionary tale to those expecting corporate margins to compress dramatically. Most have probably figured out how to pass it through.
Blatant version of "drip pricing" -- If you subscribe to the digital New York Times, you get access to only some of the publication. Although the front page prominently features images and links to New York Times Cooking and Wirecutter, reading the articles at those links requires you to purchase a separate subscription.
And therein lies why I’ll try to keep my 2007 diesel pickup until I literally die. No “add-ons”, no need for DEF in my model year, technically still only 1/2 way to “end of life”.
There is a difference in charging for once free luggage space and more leg room on a limited flight and heated seats. The marketer in me says 'short' the stock. They are creating a barrier to ownership; instead BMW should be paying $20 a month and gathering all the user data they can acquire in order to create a better 'experience'. Which do you think a consumer is going to be more proud of.... BMW pays ME.... vs., those motherf*ckers want to charge me $18 ..... Geez, every car company should absolutely crucify BMW. This big brother bovine scatology is going the way of the dinosaur....
I just wanted to share this w/you Dr. Pippa:
My 15 year old came home the other day saying, “Mom, people are suddenly talking about shrinkflation like they’re uncovering a new thing.” The kid is interested in all things geopolitical and economic so I’ve been sharing your writing with him for YEARS, so of course he heard the term and the idea some time ago. :)
It’s happening!
Hilarious that Pippa blames Putin for higher gas prices.
just posted your substack address on my FB page telling my friends to start reading you. Amazing work week after week. Thanks Pippa