It’s a common theme on Scott Adams blog, the notion that many companies, in order to avoid competing on price, creating buying structures that are impossible to understand, thus hiding true cost.

I think what’s surprising to me is that I’ve only ever heard the term from Scott Adams, but anyone who buys things, particularly corporate purchasing, knows this is common, so why don’t you hear mainstream economists speaking of confusopolies?

10 thoughts on “Confusopoly”

  1. I think the discussion exists, even if the term isn’t used out in the open. I remember reading somewhere–I can’t remember where–discussing the idea of “tiered selling”, where you charge a lower price for those who can’t afford it (such as small businesses, individuals, people in third-world countries), and charge a larger price for those who can (such as large businesses). The weird thing was that, in the case of certain large businesses, you *had* to charge larger prices, because of budgetary expectations, and the belief that, if you weren’t charging lots of money, your services wouldn’t be worthwhile.

    This last little bit may have come from the book “A Perfect Mess”, but I could be wrong. (A fascinating book, by the way, that points out that perfect order can be just as bad as complete haphazardry.) Sometimes we can get so rigidly stuck in bureaucracy that we end up hurting ourselves in the long run.

    And I certainly remember reading about the art of using coupons to encourage interest in your product, from a Casual Game magazine.

    Overall, I think “Confusopoly” is a good term for it…one reason why I don’t like “clipping coupons” is because I don’t want to put in the energy necessary to “game the system”. It’s just not worth it to me!

    1. You’re confusing confusopoly with good old fashioned price discrimination, though I can see that confusion and complexity can be used as a mechanism to implement price discrimination (those who are impatient get charged more).

      Price discrimination is charging different customers different prices, usually to increase revenues by charging higher prices to customers that value the goods more. How you do that can be tricky, but a straightforward (though dated?) example is stock market tickers. Delayed ticker are offered cheap or free to people who are merely interested, but real-time tickers cost real money to traders who want to know what’s happening that moment.

  2. A number of years ago I did engineering stuff for Big Company X, and putting project budgets together was a hemorrhoid of the first order. BCX got substantial discounts because we bought so much stuff, but the discounts depended on what we were buying, from whom, and whatever deal the BCX purchasing agents at HQ had wrangled for, divided by the time of year (closer to end of quarter got us better deals) and, apparently, what phase the moon was in and what the neighbor’s dog had for dinner the day before.

    We went nuts, and so did purchasing, getting quotes because we couldn’t use suppliers’ published prices times a standard discount percentage, and everything we did was ROI’d into our product cost. Several times I specified stuff I knew we could get better prices on elsewhere only because I could get a real price in an hour, not two weeks.

  3. What I get from Adams’ blogpost is:

    1) His wife doesn’t realize that “special offers” add more trouble than they’re really worth.

    2) Whatever shopping site he picked has idiots designing it.

    3) He seems to think that his not knowing if he had the money, or what sizes his wife wanted, are the retailer’s fault somehow, for making it “difficult”

    4) He somehow thinks using a lame Norton product is a good idea, and also transfer the rage generated by how much it sucks to the retailer.

    5) He thinks “free shipping” is actually free. (And is willing to waste far more time and effort on trying to get it than it’s worth even if it WAS free, not baked into the pricing.)

    Of all of that, the only legit quarrel with the retailer is #2.

    Confusopoly? He’s confusing himself.

  4. Nothing tricky about free shipping. If the site offered one dollar items, only a rich person like Adams would just pay shipping.

    It isn’t intentionally confusing. Buying online is confusing because it is designed by committee. One team here, another there, each thinking their contribution is the most important. Each team has a manager that provided off-the-cuff input that they put too much stock in, and worked hard to incorporate.

    The programmers are always late, and so to save time and money, they lie about having beta-tested products. “Sure we brought in ten regular people from outside and had them try our program. We did that between 9pm, when you changed the specs, and 8 am this morning when we delivered the revised code.”

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