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    « Golaith Isn't Embracing Digital Services | Main | Google Acquires YouTube $1.65B...So What? »

    November 20, 2006

    Nickel and Diming

    This is an interesting concept.  We have all heard the term and most of us have used it.  I am sitting on an American Airlines flight and the flight attendant is walking through the aisles asking if people would like headsets.  The gentlemen next to me motioned that he was interested.  The flight attendant said “that will be $2”.  He said no thank you and shook his head in disgust.  He thought he was being “nickel and dimed”.  The people in the row behind me bought headsets.  I am in the bulk head seat.  I noticed that everyone in first class received free headsets.  Do I feel “nickel and dimed”?  No not really.  For about $150 I am flying 1,500 miles.  The taxi cab that drove me 15 miles cost $30.  If I had paid for a first class ticket (of which I have never done so, because I believe it is a waste of money), or been upgraded (because I fly a lot) then I would have expected headsets and a lot more.  I have a choice.  If I want headsets and I have a choice.  If I want a meal I have a choice.  I have a lot of work to get done, and would prefer not to have the distraction of a meal or a headset.  If American Airlines was giving this to everyone as part of the standard service, they would have higher costs (headsets, food, flight attendant labor, disposal, etc.).  Many people would have taken the food, eaten a little and throw the rest away.  They weren’t really that hungry, but felt obligated to take the food because they “paid for it”. I recently went to Hawaii for a conference.  The hotel wasn’t cheap.  When the bill was delivered at the end of the stay it had a $15 per day “resort fee” on the bill.  It wasn’t a tax, there was no real good explanation for it, and it wasn’t optional.  Now this is “nickel and diming”. I believe that the litmus test to determine if you are being nickel and dimed is the following criteria:

    1. Am I buying a commodity product or a premium product?
    2. Is the incremental service optional?

    Am I being "nickel and dimed"?

        Commodity   Premium



    Not Optional




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