Apple’s new MacBook Neo comes with a $599 price tag. It’s aimed at price-conscious college students and young professionals. But if you have more to spend, Apple has products to spend more on. The MacBook Air starts at $1,099, while the MacBook Pro begins at $1,699. This “good, better, best” framework has long empowered consumers: selecting bespoked products aligned individual needs and budgets. Beneath this veneer of choice lies a highly engineered practice economists call price segmentation. But when our purchases require time consuming research into what differentiates one product from another, something is broken.
Think of the last time you purchased plane tickets. Was it painless? Or was it testing your limits with administrative burden? Southwest offers four distinct “Fare Products.” United has five “Cabin Experiences.” Turkish Airlines has seven unique fare types across two “class” segments. Not to mention, the entire framework shifts depending on which credit card you paid with, what your frequent flyer status is, and if you booked during a lunar eclipse while Mars was in retrograde. “ChatGPT, tell me which airline will let me purchase a ticket without breaking down in tears.” I’ll save you some time: every fare type will result in boarding with Group 479.
Airports are equally culpable in this chaos. During a recent trip, I learned it’s not enough to show up with a driver’s license. I was staggered by the sheer variety of ways one can authenticate their identity. Some licenses are “Real IDs” (marked with a gold star); other IDs are not compliant but acceptable (for a fee.) Digital IDs from Apple and Google are now in the mix, alongside for-profit biometric scanners like Clear and TSA PreCheck. Regardless if you’ve opted for the traditional service, or a paid for premium option, you’re still subjected to a TSA scolding regarding an expired sunscreen bottle.
No matter how much money you have to spend, sellers will always have products and services designed to take just a little more than that. Business types refer to this as “capturing consumer surplus,” which is Latin for “paying for more than you need.” How can consumers avoid this money grab? For starters, acknowledge optimization is a trap. We are rewarded for researching every variable to ensure the most value is obtained at the lowest cost. But in a world of infinite choices, we trade our high-value time for low-value savings. If you spend four hours researching a laptop to save $100, you’ve essentially hired yourself as a consultant for $25 an hour. Is your time truely that cheap?
Consumers can also adopt a barely sufficient model. This means defining a baseline of what you actually need – a working screen… a seat that gets you from here to there – and ignoring the YOLO upgrades. The best deal isn’t necessarily the best deal for you. The right option might be the one that saves you hours of research at the cost of an extra checked bag you’ll never use. Our time is a finite resource. When companies makes their pricing structure a complex labyrinth of decisions, they are stealing that resource. The value of a product should be based on the quality it provides, not how cheaply it can be obtained.
In 1909, Henry Ford hailed that a customer could have a car painted any color they wanted, so long as it’s black. At the time, the Ford Motor Company could assemble a Model T in twelve hours. Today, a modern Ford rolls off an assembly line every 90 minutes; in any shade under the rainbow. We’ve reached a bizarre inflection point where it takes longer to buy the car than it does to actually build it. Somewhere between custom colors and twelve different types of quilted leather options, businesses have mistaken infinite options for limitless value.
Somewhere along the way, consumers have been drafted as involuntary concierges—forced to manage a digital clutter of apps, accounts, and fine print just to make a basic purchase. For the modern consumer, the ultimate value comes from reduced purchasing friction. In the coming decade, the best companies will be those that regard us for what we truly are; customers. And the best user experience will let us get back to our lives.
