My “It’s the Economy†column for this coming Sunday looks at some of the reasons that people who interact with the wedding industry so often feel ripped off.
There’s very little price transparency, and stories of wedding-specific markups abound. In the column, I mentioned that Austan Goolsbee recalled one caterer jacking up his quoted price upon realizing the meal was for a wedding, rather than some more generic family function. (Mr. Goolsbee, an economics professor at the University of Chicago’s Booth School of Business, said he decided to hire a different caterer after that exchange.) Online bridal forums and wedding-related media tell similar tales, and a consumer advocacy group in Australia even ran an experiment where “shadow shoppers†found price were often higher when requested services (venue rental, photography, etc.) were quoted for a “wedding†rather than a “birthday party.â€
Based on my experience as both a consumer and an economics reporter, when vendors engage in this kind of price discrimination, they often try to explain it away as being driven by higher costs. And maybe it’s true â€" brides are stereotyped as being pretty high-maintenance, after all, possibly requiring more time and hand-holding from the vendor, and maybe also less flexibility regarding input costs.
“You can’t substitute beans with broccoli if the price of beans goes up,†said Fiona Scott Morton, an economics professor at Yale School of Management, who has in the past studied price discrimination in the car sales and funeral industries. “If the bride wanted beans, you have to have beans. Corporate clients on the other hand might just want to make sure there’s a vegetable on the plate.â€
I’m not convinced that input costs are always higher for wedding-related services though. As Karen Weise, a reporter at Bloomberg Businessweek, tweeted:
I’ve also come across dresses that look pretty darn similar but are more expensive in white than in every other color. Another reader, L, submitted a related comment saying:
Wedding price gouging exists even when prices are clearly disclosed. While shopping for photo postcards, I found that ‘graduation announcements’ cost 0.70/ea and ‘wedding save-the-dates’ cost 0.80/ea, despite having an identical design.
As I wrote in the column, part of the reason that retailers can get away with charging higher prices for wedding-related services is that spouses-to-be probably have stronger preferences for their “special day†than consumers shopping for other kinds of events do. That means they’re less price-sensitive. In the case of gowns, for example, brides probably have much more specific requirements for their own dresses than for the dresses that their bridesmaids will wear, allowing retailers to charge different prices for each, regardless of what material or labor costs go into the respective frocks.
Charging different prices for a product or service based on the broad category of customer is known as third-degree price discrimination (e.g., cheaper movie tickets for seniors and students, cheaper dresses for bridesmaids than brides). Some vendors might also engage in other forms of price discrimination by, say, nudging less price-sensitive shoppers toward higher-quality and higher-cost options (e.g., let travelers self-sort into first class versus economy seats); or by charging a different, ad hoc price to every customer who comes in the door based on perceived willingness to pay (e.g., what might happen at a flea market when there are no prices posted … or perhaps also at a bridal shop if there are no prices posted).
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