Discriminatory pricing for discriminatory services

I remember initially being surprised that security lines at airlines would be shorter for higher fare travelers, but Americans are getting used to class distinctions. The NY Times has this story, focused on cruise ships: In an Age of Privilege, Not Everyone Is in the Same Boat: "Companies are becoming adept at identifying wealthy customers and marketing to them, creating a money-based caste system."

"In theory, according to Steve Tadelis, a professor of economics at the Haas School of Business at Berkeley, “when an industry is able to create a richer line of products for people looking to spend their money, that makes everybody happier. But getting it right in reality is very, very hard.”

"As companies separate their clientele, a debate has developed over just how obvious the distinctions should be. Some experts, like David Clarke, who works with leisure industry giants as a principal at PricewaterhouseCoopers, say that it is best to be open about what amounts to a money-based caste system.

“It’s about transparency,” he said. “What customers hate is when you’re trying to hide stuff and are not being honest with them.”

"Many companies, though, have discovered that offering ordinary customers just a whiff of the rarefied air can actually enhance the bottom line, even if it stirs a certain amount of envy and resentment.
...
"Even though this kind of pampering might be good for business, and delight those on the right side of the velvet rope, the gap between the privileged and the rest may ultimately leave everyone feeling uneasy, said Barry J. Nalebuff, a professor of management at Yale.

“If I’m in the back of the plane, I want to hiss at the people in first class,” said Mr. Nalebuff, who has advised many Fortune 100 companies. “If I’m up front, I cringe as people walk by.”

Service upgrades

This sentence is, in my experience, more typical of service upgrades than its author perhaps realized.

"We are enhancing your online experience, and my AT&T is temporarily unavailable."

The market for knife sharpening

There was a time when knife sharpeners brought their grindstones to the meat packers and butchers who were their main customers, and sharpened customers' knives on customers' premises. Now, the NY Times reports, the model is to rent a double set of knives to customers (who now include restaurants), so that the knife sharpener can come in and exchange all the dull knives for sharp ones, and sharpen the knives on his own premises: Venerable Craft, Modern Practitioner.

Apparently this business is one with ethnic, networked roots:
"Mr. Ambrosi’s grandfather, who came to the United States in the 1920s, hailed from the poor village of Carisolo. The village, with two neighboring towns of Pinzolo and Giustino, produced many of the more than 100 commercial knife sharpeners at work today in North America, sharpeners said. "
...
"At first the immigrants came mainly to New York, but soon their offspring scattered to stake out new routes, a dozen sharpeners across the country said in interviews. Ambrosis with grindstones do business in Connecticut, New Jersey and Ohio, as well as boroughs of New York. The Binellis set up knife-sharpening businesses in Detroit, Chicago and Medford, Mass.; the Maganzinis ended up in and around Boston. The Povinellis set up shop in Buffalo and ventured to North and South Carolina and Arizona; offshoots of the Nella family went to Toronto and Vancouver, as well as Long Island, Seattle and West Jordan, Utah.

"Robert Ambrosi’s grandfather traveled the Bronx in a horse-drawn cart with a grindstone powered by a foot pedal, serving, like the other knife sharpeners, mainly butchers and meatpackers.

"Mr. Ambrosi’s father used a grindstone fueled by a battery carried in a truck. The battery had to be plugged in each night in the garage to recharge. Then in the 1950s came the great innovation — double sets of knives — that eventually freed the Ambrosis to set up their first shop."
...
"Some of the northern Italian knife sharpeners still function in the old style, as members of the New York Grinders Association. The rules used to be simple: Don’t mess with someone’s turf. Stick to your own route — the one you inherited from your father or grandfather. Avoid the vendettas that have overtaken sharpeners in other cities.

“People will trade stops,” said Rinaldo Beltrami, the association’s president.

"Mr. Ambrosi, who let his membership in the association lapse, said, “I was brought up in that way of thinking.” Yet he will still sometimes appease a competitor by saying, “Let’s sit down, we’ll have a meeting, we’ll make a borderline — I won’t bother you.”

"Yet his sons have been knocking on doors to establish new routes, and Mr. Ambrosi has developed a Web site and a mail-order service, because his sons need enough business to sustain their future families, too. "

Service versus self service

In some markets you serve yourself, in others you are served. Which is the luxury? It depends.

The recent decisions by some universities to manage their shortage of central-campus parking has raised some eyebrows:
Recession? Valet Parking Arrives.
And, indeed, that story makes it sound as if some of the parking decisions are meant to increase customer service where there's a shortage of conveniently located parking.

That being said, it's often more convenient to be able to park yourself rather than have to rely on someone else. But parking lots (and, in Manhattan, multi-story garages served by car elevators) in which the attendants park all the cars allow more cars to be accomodated in a given amount of space. It may be a luxury to leave your car for someone else to park, but it's seldom a luxury to wait while your car is brought out of parking.

Years ago, a colleague from Brazil remarked that one thing she liked about living in the United States was that she didn't have to deal with servants. I foolishly asked why in that case she couldn't just dispense with servants when she was in Brazil. The answer of course was that many things that are designed for self service here are more labor intensive there. I recall that one example was that chicken is sold shrink-wrapped and ready to cook in American supermarkets, but was apparently sold with pinfeathers still attached in Brazil (in those days).