Econ 101 was quite a while ago but, as I recall, rising costs result largely from inflation, currency inequalities, supply issues and demand issues. Rising prices flow in turn from rising costs and, I suspect, rampant inefficiency and the occasional irresistible price-gouging opportunity. My recent experience indicates that the cost of having to do everything twice in order to get it right might also be a significant factor here in the 21st century.
I wrote not too long ago about the trials and tribulations of an attempt to get new glasses. That finally came out OK late last week, but only after the vision center rechecked my prescription, confirmed that it was in fact wrong, and then remade the glasses. I have no doubt that the glasses for which I paid multiple hundreds of dollars cost only a fraction of that to make, but still - having to do the entire process twice must have cut into the profit margin.
We decided a few weeks ago to refresh the paint on our exterior shutters, pillars, fasciae and so forth. The painting outfit we selected to do the job had all the basics of marketing and selling down pat: good ads, great brochure, an exceptionally convivial and knowledgeable estimator/salesperson who came the very day we called and was able to do the estimate on the spot, and a quick scheduling process. They even had an owner from the East - an intangible that we've learned from bitter experience is very important. Home service people from the Midwest and East have been great; those from Utah, Oregon and Washington are also good, but to steer clear of serious annoyance, it's necessary to avoid the ones from California and Nevada like the plague.
Anyway, once the actual painting job was done, it fell short of what had been advertised. We called to request a review, the owner of the company came out, looked things over, agreed that it wasn't up to "our usual standards" and apologized profusely. The redo is scheduled for Friday.
And this morning I opened an email shipping confirm of an order I placed with a food retailer. This is a joint with wonderful foodstuffs and exorbitant prices. The prices are almost OK given the extraordinary quality of the food, but I usually get tripped up by the shipping costs. They are outrageous. (Excuse me, but things like a tin of Spanish tuna and a box of licorice do not require the same shipping protocols as live lobsters.) I rarely order, but they sent me a "How about 20% off?" email and I figured the 20% off would cover the shipping.
(I know, I know. I'm a sucker. I'm aware that these emails are based on classic drug dealer behavior: give them a taste for a bargain price and they'll be back for a boatload at full price as surely as night follows day.)
So the shipping confirm email this morning gives me a tracking number for the package, which is supposed to be delivered today. The confirm has all the right info (including the shipping address), but imagine my surprise when I click on the tracking number and learn that the package is "out for delivery to Wilmette, IL."
I lived in Wilmette, IL, until January 2005. I have ordered from this retailer three times since I moved to Nevada, twice for myself and once as a gift. Nowhere in my account information on their website is any address in Wilmette, IL. This could be a bizarre coincidence, but I'm betting they have an outdated shipping database that doesn't tie to account information or, apparently, to actual shipping invoices.
How on earth can these companies have respectable profit margins? It's not like they don't know mistakes cost money. That's the whole point of best practices benchmarking, TQM, Six Sigma and whatever new flavor-of-the-month "quality" initiatives have taken their place since I left the corporate world. I don't know which is more alarming - the possibility that companies have built the cost of redoing everything into their price structures (kind of a preemptive price-gouging) or that these constant mistakes come as unpleasant surprises that require steadily increasing prices to offset.