Bill Matthies

Electronics and Cardboard: Lessons in Price Perception
July 20, 2007

Maybe it is the exceptions to rules that prove the rules. Or maybe we just live in a very different, assbackward time when it comes to product pricing. Case in point, the box fan and piece of cardboard I bought this weekend.

My son’s bedroom is towards the back of the house and has much less air circulation relative to the rest of the rooms. As a result, it is much hotter due to dead air. With that the case I decided to set a box fan in the window, blocking out the open top half of the window with a piece of cardboard. In case you don’t know, doing so significantly increases the amount of air that is blown into the room when the fan is pointed inward, or blown out when the fan is used to exhaust air. Without the cardboard much of the air being blown simply cycles in a tight circle around the fan (I know, very Mr. Wizard.)

So I bought a 20-inch box fan at Target for around $12 along with a 24- by 36-inch piece of poster board commonly used in school projects, for around $5. I simply set the fan in the window, cut the poster board to fit the opening above the fan and voilá, problem solved. “How cool was that?” (no pun intended) I thought to myself. “Low tech cooling for less than $20!”

Then it hit me that, one, the fan was only $12, and, two, the piece of cardboard was 50% of the price of the fan. How could that be? Had we reached a point where something electronic, even a lowly fan, could really only cost $12 and that a simple piece of cardboard could be half that much? Consumers would not expect that to be true. Surely if a piece of cardboard is $5, an electric fan would have to be much, much more wouldn’t it?

I was in Dubai this spring and someone there made the point that in the UAE a gallon of gas costs less than a gallon of water given the abundance of the former and the shortage of the latter. Yeah, that figures, but not in the United States, I said to myself. We’ve got water but not the gas, which must be refined from expensive crude that seems to only increase in price. Thinking about what was to me a backward price relationship between the fan and the cardboard, I thought about the gas/water thing some more, and in the process realized that even at only a $1 for a 20 ounce bottle of water, we too are paying more than double for a gallon of water what we pay for a gallon of gas.

But hey, year after year the price of just about every CE product goes down rather than up, so I guess, why not? I was certainly happy to only pay $12 for the fan but would have easily paid double that. In fact, I expected that even a no-frills fan would have to cost at least $20 if not more.

Hmmm, water and cardboard more expensive than gas and electronics. I didn’t see that coming.

Posted by Bill Matthies on July 20, 2007 | Comments (1)