This is not something that I haven’t brought up before. I believe during the lockdown/pandemic period I mentioned how companies are totally taking advantage of their power over the consumer and while I still think that is true, my thinking is now on a much more localized level.
While localized trends rarely have a much larger impact on the economy or markets, I think, after you read this, you will see how the worm might be turning (hopefully) and those small localized trends can turn into something bigger.
First thing, and this is a warning, today’s column is part bitch-fest and part vision on the solution.
I am sure everyone has experienced what I like to call “The abuse of the consumer” at one time in their lives. Probably multiple times and the frustration level from any of these experiences runs from, “This sucks” to “I want to crawl through the airwaves and land in your office and beat you with a stapler”.
The consumer frustration level is just getting worse and worse and we all know it will never get any better because they have all the power and we have none.
Which isn’t exactly true but you know the feeling.
As a homeowner on the North Shore of Long Island I have seen the invisible added surcharge based on my location many times. It is a given, when someone comes to my house to do a service, the price is increased based on the Redfin estimate of my homes value. Theses service people will never admit it but their is surge pricing in what they do. The same service in a different community might be 10% less. The other added cost is the service company’s ability to use and charge for additional service technicians to come to a property and perform a service.
Example number 1: I have a pool, it’s a nice pool and I have a pool company that services my pool. At some point, my filter pump stopped working. Oh, it would start and then it would stop. I call my pool company and they send their technician to check the pump. The conclusion, I need a new filter pump. They can give me a friends and family discount and it will be $2,800 dollars. Hmm, considering that the filter was four years old (just out of warranty) and I have had five pools for thirty years and never once had to replace the pump, I was suspicious. I said “send someone here who knows what they doing and re-diagnose the situation. They did and lo and behold it is the circuit breaker. Ants had shorted it out and it needed to be replaced. Ok, done. I get the bill, 489 dollars! I look at the bill, 2 technicians were here for an hour and the breaker is a “special” breaker. HMMM. BS I say. IT took them approximately 3 minutes to come, replace, check and leave. I called an electrician friend of mine and asked him about it. He said, “First off, you could replace that circuit breaker for 45 dollars and no, I would not send two technicians to do that. If I went if would be probably 175-200 dollars. My time is valuable too” Thank you. I spoke to my company and bitched but came to no resolution. Now I watch everything these guys do and I still get ripped off.
Point number one. They run a business that most people don’t care to look into how easy it ease to do. The chemical part of it is easy. You have an electrical problem, call a trusted electrician. Replacing a pump? Buy the pump online and have a plumber replace it.
Example number 2- Different pool company but much more egregious ripoff. The location was in Sagaponack out in the Hamptons and the pool company stated that the salt generator had failed. I did some research, they usually last 5-8 years, this one was 10 years old. Ok, I’ll bite. The cost 2,900 dollars! I looked up the replacement part on Leslies.com, it was 997 dollars. Two thousand dollars plus to replace a part!!! I happened to be there when the technicians came in to replace this part. They were there five minutes!!! I tried calling the pool company and they have yet to return my call. They will close the pool and they will be fired.
The point here is, they have you by the you know what and they have absolutely no problem overcharging you for something because they know you are stuck.
This is not isolated. I have known people who have taken on a lot of different functions that they normally would not do just to avoid being taken advantage of.
The point I am trying to make is that we all get ripped off by service providers because they have a skill and knowledge that we think we can’t equal but let me be the first to tell you, you most certainly can do 80% of whatever these people do.
One last minor grievance. My sprinkler people are going to be fired as well. The installation of sprinklers is not hard or super complicated but it is just easier and better to have a reliable company come in and install. After that, you can do everything they do at about 95% less. Replace a broken head? Simple. Check for a possible leak, simple as well.
Example number 3. I had removed some hedges and the sprinkler head that watered those hedges stuck out like a sore thumb. I needed it to be lowered by 1 1/2 feet. The sprinkler guys came and took care of it. $298 later. It’s not the biggest ripoff but the replacement head was 15 dollars and they had two people do it. Guess the second person was there to watch for snakes. Not sure why I had to pay for two. These guys aren’t union. Everyone needs to have a profit margin and I suppose the profit margins get bigger when you go past some imaginary line of demarcation on Long Island.
I know I am moaning about problems that really are not significant in the macro picture but if you look at it a little deeper, they do impact the macro picture.
What is happening is people are taking on the easier projects not because they can’t get someone there to fix it or they have extra time on their hands like during the Pandemic. They are doing it because the service providers have taken advantage of their customers to such an extent that people are just tired of paying out the nose for the simplest things.
A lot of this taking back some control over the expense of homeownership has to do with the advent of YouTube. If you want to rewire the electrical panel in your basement, there are over 500 videos showing you how to do that. Would I do it, no. But it’s there. Doing minor plumbing work? There are videos for practically every scenario you can encounter.
Home repair has always been a thing. Why get someone over to replace an advantage at a cost of 125 dollars when you can go to Lowes or Home Depot or better yet, your local hardware store and buy that outlet for a couple of dollars.
The point is, there are certain projects that can be done without any involvement of an overpriced service provider and while we keep an eye on the earnings of the Home Depots and Lowe’s of the World to see what the trends are, let me tell you that more and more people are going to take these projects on.
I know, I know, I am retired and I have the time but at some point, everyone will start doing stuff that they used to hire someone to do, not because we want to hurt small businesses but because we don’t want small businesses taking hurt us.
If my pool guy said the replacement of the salt water generator was 1,500 dollars I would say ok. He has to buy it, and he has to have installed and he needs to make money as well. I am not against small businesses trying to make money, I am against small businesses trying to make all their money in one shot, at my expense.
There is an area where consumers have zero power and no control and that my friends is the airline industry. The airline industry is the one industry that truly does not care about their customers. Zero. They also, apparently don’t really care about their employees either if you look at some of the industrywide polls showing satisfaction in the workplace.
I will never defend poor actions by people on planes but considering the treatment everyone gets on every flight, I can see how people act unruly.
Management could care less. All their flights are full and they raise prices based on algorithms on a minute by minute basis. Customers have little to no choice but to fly and the carriers know that.
The Federal Government could care less as well. It seems that the airline industry like the NRA has some very powerful friends in Washington. That will explain how the airline industry is never held account for their complete disregard for their customers. No on is watching them.
I don’t have a solution for this problem other than the Federal Government needs to step in and hold the airlines accountable. I am just not crazy about the prospect of the Federal Government getting more involved in the business of business.
I said it over a year ago about the pendulum should start swinging in the consumers favor and in a way it has.
When the consumer decides that a particular product does not meet their needs either by smaller packaging or changing ingredients from a tried and true formula, they can balk. This change of consumer preferences can change corporate preferences as well. We see it from time to time and I think over time, after income is impacted, producers realize they screwed up. The BudLight fiasco is the most recent example.
With the advent of social media and it’s power, these push backs can take on a very quick life and affect marketers and producers much faster than in the pre-social media times. I am not 100% sure if this is a good thing or a bad thing because social media has hurt as many people as it has helped.
Problem is we are all getting, MMMmm longer in the tooth, and have the mental ability to deal with the problem but not completely, the physical.....Plus we've worked all our lives to get to this point that er shouldn't have to do whatever, and your right, we get taken advantage.
I know its going to be a "learning" week when you start it with a bitch session;) Love It!