My college roommate once said “When you get deep into any subject, you learn that it quickly becomes a totally different subject. Math becomes computer science, biology becomes chemistry, and chemistry becomes physics.” I’ll add that pricing and marketing analytics quickly becomes behavioral economics.
I encourage anyone to spend a little time (but absolutely no money) at the auction site beezid.com that’s making a splash in the media. The somewhat crude and seedy design elements raised a scam flag in the back of my mind, but there were a few offsetting factors:
But after figuring out how they could sell a $600 Home Depot gift card for $30 made me believe that they are, in fact, evil geniuses.
The “genius” part comes from how the site brilliantly takes advantage of nearly every single trick in the behavioral psychology textbook. Here’s just a few:
So what could be evil about selling products at over 90% off? The “evil” part comes into play when looking at the business model. It’s a sucker’s game- every win is funded by the myriad losers, or “none of us is as stupid as all of us.” Bids are sold for about $0.60 each (though oddly, one can use bids to bid on sets of bids and get them cheaper). So backing into the math, if they wanted to break even on a $699 iPad, they’d need users to burn 1,165 bids. Auctions start at $0.01 and move resolutely by a penny per bid, means if the price gets to $11.65, they’re making money. In fact, the last four $699 iPads went for $23.67, $143.22, $19.52, and $155.83. That last one netted them over $9,000. Genius.
Full Disclosure: I’m not a big auction-site user. I’ll dabble when looking for something unique, antique, or used. I poked around this site and bought a small pack of bids to see what the site was all about, got excited and bought another one, wrote this article and then closed the account. I don’t expect to return.