Looking for some financial improvements in the New Year? Why not get rid or lower a monthly expense that you don’t need? Do the yard yourself – it’s good exercise too! Sell that extra car (and the insurance payment with it)? Or trim that ever-growing cable bill? It appears the Wall Street Journal has caught onto what many people (including me) have been doing for years with it’s article Customers Say to Cable Firms, ‘Let’s Make a Deal’.
Want cheaper cable television? Try asking for it. Every three to six months, when his most recent promotional deal expires, Carey Anthony blocks out an hour of his day to negotiate with his cable company. Each time, the president of a software company in Los Angeles says he can knock $20 to $30 off his monthly bill. “Negotiating works every time,” says Mr. Anthony, 46, who estimates he has saved more than $350 a year over the past decade. “Sometimes you have to threaten to cancel service, or switch to another provider, or sit on hold for an hour, but I’ve never failed to get a discount,” he says. “You just have to be diligent.”
This sounds just like my own experiences in cable bill and internet haggling since 2005 with updates from Comcast (2007) and DirecTV (2009). Similar to Mr. Anthony, I’m probably ahead hundreds of dollars using this tactic, although I’ve moved around a bunch and thus taken advantage of new-customer perks as well.
In behavioral finance terms, what Comcast and other businesses are doing is called price targeting. If Jane is willing to pay $50 a month and Jill is willing to pay only $30 a month for my product that only costs me $15 a month – I would love to have both Jane and Jill paying me whatever they are willing. But if Jane finds out I’m offering Jill the same thing for $20 a month less, she’ll get mad even though she was fine without that knowledge. So, Comcast waits until Jill complains and offers her the $30 a month plan quietly:
Many providers offer less-expensive packages with fewer channels but don’t advertise them widely. Providers often will allow customers to continue cost-saving promotions well after they expire. Other providers will cut you a new deal every six months—but you have to call and ask. Often, if customers threaten to cancel service, they are transferred to the “retention department” staffed with representatives who are trained to offer customers deals to stay put.
Now, some people are offended by these tactics. I suppose that is partially cultural; in many countries such negotiations and haggling are a part of daily life. Price tags (and thus common prices for all) were an invention of the chain store as it grew from small shops.