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maryam@impact
[email protected]
2/26/2018 | 11:52:45 AM
Pricing clarity
Its a very interesting strategy for businesses but it most likely makes profit margins very different. For many companies, the product bundle is a specific methodolgy to achieve certain margins on products especially those becoming commoditized, it makes price comparision less black and white.This model seems to lay bear all that is involved in pricing and usage. I am interested to see if it will fuel price battles when the business consumer is armed with their usage data and cost profile.
Ariella
Ariella
2/26/2018 | 12:40:49 PM
Re: Pricing clarity
@Maryam Yes, I think it will take some people some time to wrap their head around this new paradigm. But if you think about the flexible options currently in use for busiensses -- including renting temporary offices rather than committing to spaces long term - - it is a sign of the times.
kq4ym
kq4ym
2/26/2018 | 12:52:42 PM
Re: Pricing clarity
Seeing how it's "almost like buying a gift card," it reminded me that merchants make a nice profit from using the float on those cards, receiving the money often a long time before the card is used, while expecting that a great number of the cards don't get used at all. I wonder if that might be a part of the profit plan at SAP for the newly offered cloud plans.
Ariella
Ariella
2/26/2018 | 1:12:25 PM
Re: Pricing clarity
@kq4ym On top of that, a number of gift cards are never cashed in at all. I know we've received some that we could never use. Then there are the cards purchased from stores that go out of business, so those cards are then worhtless. 
kq4ym
kq4ym
2/27/2018 | 11:47:48 AM
Re: Pricing clarity
Yes, I have several cards that have not been used at call or rarely. Buying credits or gift cards seems convenient, but as the retailers have seen, they are definintely a profit center gambling that the card buyers won't fully use those credits.
Susan Fourtané
Susan Fourtané
2/28/2018 | 4:10:12 AM
Re: Pricing clarity
It’s the gift card culture. You find it everywhere and of course companies get more than what they give out of them. Otherwise, they won’t do it. There is not such a thing as “gift” or “free.” Everything comes with a price.
maryam@impact
[email protected]
2/28/2018 | 4:02:54 PM
Re: Pricing clarity
It may sound better than it is retailers still have to account for those unused Giftcards on their books as a liability. I recently had a gift card that a was a merchandise credit that I hadn't used in a long time the retailer called an asked if I lost the card and needed a new one. I got a new one and will use it but their accounting company was definitely on it.
Joe Stanganelli
Joe Stanganelli
2/28/2018 | 9:58:13 PM
Re: Pricing clarity
@Maryam: Indeed, that's why a lot of companies allow debits like that to go the state as a matter of unclaimed property rather than chase someone down to accept it. Easier, compliance-wise, in a way.
Michelle
Michelle
2/27/2018 | 7:56:16 PM
Re: Pricing clarity
There are some that take back your balance as a "service fee" for inactivity. Those are the worst gift cards!
Ariella
Ariella
2/27/2018 | 8:04:15 PM
Re: Pricing clarity
@Michelle yes, you can lose 10% or more of the value as time goes on with those. It's because of things like that plus the fact that not everyone favors the same stores that I don't like to offer giftcards. It's better to just give money outright because it has no restrictions.
Joe Stanganelli
Joe Stanganelli
2/28/2018 | 9:59:11 PM
Re: Pricing clarity
@Michelle: I hadn't even heard of that! Ugh.

I've got a gift card sitting around that I haven't touched yet. I should probably get on that.
maryam@impact
[email protected]
2/28/2018 | 11:02:48 PM
Re: Pricing clarity
Joe its especially popular with those Visa type gift cards use them or lose value every month! Be careful if you don't use it all in one transaction!
Joe Stanganelli
Joe Stanganelli
3/2/2018 | 5:19:48 AM
Re: Pricing clarity
@maryam: The Visa cards lose value every month? That sounds...strange to me. I feel like I've gone a while without using my gift cards and not had a problem.
Michelle
Michelle
3/1/2018 | 2:48:12 PM
Re: Pricing clarity
Read the fine print!! :) I have seen this on Visa and Mastercard branded gift cards. Store cards don't seem to do this awful thing. I lost $8 to these service fees once. It was heartbreaking. I wanted to buy coffee shop breakfast with my remaining balance, but I couldn't because it had been taken back due to inactivity. 
Joe Stanganelli
Joe Stanganelli
3/2/2018 | 5:21:22 AM
Re: Pricing clarity
@Michelle: Wow. That does sound heartbreaking.

This discussion has been really eye-opening. I was unaware of this. (As an attorney, I have more than enough fine print to read in my life than worrying about a few dollars on a gift card.) I'll pay attention to this in the future -- and tell people to skip the gift cards next Christmas. ;)
Susan Fourtané
Susan Fourtané
3/6/2018 | 2:31:48 AM
Re: Pricing clarity
Michelle: That’s awful and disappointing. It’s also unfair that they took back your balance due to inactivity. It sounds like a way of pushing people to use the gift cards in a certain period of time of they punish them. They can’t give a gift and take it back. Or they shouldn’t. Coffee Shop could have given you something little at least as well just to help with the disappointment. It wouldn’t have cost them too much and they could have made you a little happier.
kq4ym
kq4ym
3/14/2018 | 2:41:38 PM
Re: Pricing clarity
It's a tricky business for consumers, when the rules aren't known or they need a lawyer to interpret. But, businesses manage to pick up some easy proits with the sale of those cards.
Joe Stanganelli
Joe Stanganelli
2/28/2018 | 10:01:21 PM
Re: Pricing clarity
@Ariella: Funny how that stuff collects and piles up.

At a charity auction many, many years ago, I won a prize that included a gift certificate for a particular restaurant. There was no expiration date.

I wonder if it's still kicking around somewhere. (Frankly, though, I have no interest in the restaurant.)
maryam@impact
[email protected]
2/28/2018 | 11:05:18 PM
Re: Pricing clarity
Joe an idea for that gift card if you don't want it to donate it! Many worthy causes will give it to a hungry family or use it to get take out for someone that is ill or homebound. Play it forward someone in need can use it!
Susan Fourtané
Susan Fourtané
3/6/2018 | 2:18:46 AM
Re: Pricing clarity
Maryam: It’s a great idea to donate the unused or unwanted gift cards. I never thought about it even if it sounds so simple and logical. Thank you for the idea!
mhhfive
mhhfive
3/8/2018 | 5:56:56 PM
Re: Pricing clarity
I've found that those pre-paid VISA gift cards can be turned into more useful gift cards. As long as the gift card doesn't have to be spent at a certain store, like ToysRUs or Starbucks or whatever, you should be able to buy Amazon gift cards with a VISA gift card (for any amount over $1). Then you can use those leftover funds for anything Amazon sells (which is nearly everything). 

But nothing beats cash. Gift cards are usually just a pain.

 
mhhfive
mhhfive
3/8/2018 | 6:13:27 PM
Re: Pricing clarity
This gift card discussion reminded me that I was surprised that I once spent more than the value of a Visa gift card. I didn't think it was possible, but apparently, if you charge something on a gift card -- and the amount is variable -- then the merchant charges its "best guess" as to what you spent, but Visa will still allow you to spend the rest of the balance of the gift card. However, if that "best guess" is low.. then you can exceed the value of the card. 

For example, I used part of a Visa gift card to pay for a restaurant bill.. and left a tip using the gift card, too. The restaurant's "best guess" didn't include my tip, so I used up the rest of the balance, but when I checked the gift card balance later -- it appeared that the tip charge went through (phew), but Visa had already authorized my remaining purchases, and the total was more than the gift card was originally worth. I assume Visa will get wise to that loophole someday? (Or some unfortunate waiter won't get his/her tip....)
Ariella
Ariella
3/1/2018 | 9:04:51 PM
Re: Pricing clarity
@Joe Yes, that's just the kind of thing that makes gift certificates and cards more lucrative than they appear on the surface; they bring in money for the business at no real cost when they're not cashed. When they are cashed, they also can bring in more business. For example, say the certificate you have is good for $50. You'd seek to spend all of it because you won't get any change back, and in making sure you get full value, you would likely go up at least a bit becaues total amounts often don't work out perfectly evenly. Then they gain more of a sale on top of the orignal price paid. Multiply that effect by many gifts, and you increase returns.


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