30 January 2008

Hidden Inflation

Room Service1
Originally uploaded by csquard

I'm on the first day of my travels across the US and Canada, impulse departing around 11:20PM last night rather than leaving around 5:30 this morning. It was a very windy trip with torrential rain at times. I stopped twice to get Diet Cokes and finally decided to check into a Doubletree Hotel around 2:20AM Central. I could have slept even longer except there is remodeling going on either in my room or outside of it, I'm not exactly sure which.

Price increases have been few and far between over the last decade or so due to a number of factors: globalization and the growth of Chinese manufacturing, Wal-Mart et al, 9/11, and the significant increase in sophistication within Purchasing/Supply Chain organizations within companies. Sure, there were the different items whose prices had increased year over year (e.g., education, healthcare), but by and large getting price was a fool's errand.

Marketers have long known that initial price and price+discount are big draws for consumers especially. More and more, companies have headed for add-on fees to capture price. My room service, as an example, came with a $2.55 service charge and a $2.63 delivery charge. Most of the time, these fees and charges are collectively deployed within an industry (e.g., phone bills), leaving consumers with nothing to do but suck it up and pay. Look for these to increase as well as prices to continue to creep up as raw material costs suck dollars from our accounts.

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