The High Cost of Cheap

That corporate behemoth, Amazon.com, is out with yet another gadget, trying to preserve their market share with a “me too” tablet. Their strategy? Just as they’ve done before, sell it as a loss leader and make money in other ways until they can dominate the market — and then raise prices. In both the short and long-term, there’s a high cost to cheap.

In a society where attention deficit disorder is rapidly becoming the norm, imagine how pop-up ads will contribute to the distractions. To sell below your own cost of materials and overhead, money has to come from somewhere; when you can promise lots of eye-balls, advertisers will be willing to pay. The high cost of cheap is that we sacrifice our quiet reading space.

And imagine the value of data-mining private information about individuals. When a corporation can collect information about what we buy, what we read, how and what we research, and then sells that data to others, our loss of privacy becomes their financial gain. So, the high cost of cheap is giving away intimate details about our lives to people we don’t even know.

From a perspective inside the book industry, we see that the more power Amazon.com holds, the more it will attempt to dictate to publishers everything from price to content of the literature published. The high cost of cheap now extends to one company having a disproportionate amount of power. In other industries, this has resulted in a loss of jobs, choice, and quality.

With companies specializing in technology, more flexibility (not less!) is the goal. When customers are used to being able to navigate and buy freely, there are limitations and inconveniences to exercise that freedom. The high cost of cheap means supporting a corporation that wants to limit navigation for its own advantage.

Perhaps most importantly, it’s hard to believe that after a summer of its fervent opposition to paying state sales taxes (as even the smallest retailers manage to do), this corporate goliath would imagine it to be unscathed. The high cost of cheap is rewarding bad corporate behavior.

Ultimately, our decisions about what we buy and what companies we support is a reflection of our own values — and when, in the long run, cheap becomes too costly.

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