pricing Archives - understand-culture

Taxi Fares

In a German city, taxi fares are set by ordinance. The Passenger Transport Act lets the state government fix them, and it may pass this power on by ordinance. The fixed fares dürfen nicht über- oder unterschritten werden. They may be neither exceeded nor undercut, and they must be applied equally to every passenger. The driver cannot give a discount, and the passenger cannot offer less.

The law now has one opening. For trips booked in advance, the ordinance may set fixed prices, or a minimum and a maximum within which the fare is agreed before the trip.

When the Customer Asks for a Discount

Viele Kunden fragen bei einem Beratungsgespräch auch nach einem Rabatt. Many customers ask for a discount during the first consultation. The Deutsche Handwerks Zeitung, the newspaper of the German skilled trades, wrote this in August 2024. It went on: if craftsmen calculate correctly, a discount is often hardly possible. Its advice is to offer a reduction only with cheaper material or with fewer details. The customer then sees that a lower price means lower quality. The paper expects that he will usually wave the idea away and pay the quoted price. Its rule is short. A customer who wants a discount must give something for it.

Our Advertising Is the Low Price

Unsere Werbung liegt im billigen Preis. Our advertising lies in the low price. Karl Albrecht said this in 1953. After the 1948 currency reform he and his brother had rebuilt their mother’s shop around a small range of goods and low prices. The discounter Aldi grew from it. When Aldi cut the price of its cheapest 250-gram pack of butter from 1.45 to 1.39 euros on 1 August 2023, it was national news. Aldi called itself the Preisführer, the price leader. Edeka and Rewe said their supermarkets and discount chains would follow.

The competition over price takes place between the retailers, in public. The customer is not part of it.

What a Craftsman’s Hour Costs

In 2023 the Chamber of Crafts in Mannheim published a flyer on what a craftsman’s hour costs. Its business adviser Rolf Koch encouraged craftsmen to hand it to their customers. The flyer takes apart the hourly rate of a metalworking shop. The journeyman’s gross wage is 21.50 euros. Then come social costs set by law and by collective agreement, operating overhead, the owner’s own pay, and a surcharge of 3.59 euros for the owner’s risk and profit. With 19 percent VAT, the hour costs 76.58 euros. The flyer calls this the lower price limit. Koch’s comment was blunt: Darunter kann der Betrieb nicht, sonst muss der Chef weniger essen. The shop cannot go below this, or the boss has to eat less.

As Dear as I Ought

In 1524 Martin Luther published Von Kaufshandlung und Wucher, On Trade and Usury. He quotes the rule of the merchants. In modern German it reads: Ich darf meine Ware so teuer geben, wie ich kann. I may sell my goods as dear as I can. Luther calls this rule the basis of all the tricks of usury. He tells the Christian merchant to ask a different question: Ja, wie teuer soll ich’s denn geben? Wo treffe ich das Rechte und die Billigkeit, dass ich meinen Nächsten nicht übervorteile oder überteuere? How dear should I sell it, then? Where do I find what is right and fair, so that I do not take advantage of my neighbor or overcharge him? Luther also gives the method. The merchant should count the days he spent getting and fetching the goods. He should weigh his labor and his risk, and compare his reward with the wage of a common day laborer.

right to negotiate

American law, particularly contract law, emphasizes the freedom to negotiate and bargain without state interference. The principle of caveat emptor, or let the buyer beware, underscores the expectation that both parties in a transaction are responsible for establishing a fair price. Unlike German law, which may emphasize fairness and transparency, American law prioritizes individual autonomy and the right to negotiate based on perceived value.

Bernd Stromberg

In Stromberg (2004-12), a German mockumentary-style sitcom, Bernd Stromberg, a self-serving middle manager, attempts to negotiate a promotion. Stromberg’s negotiation style is overly blunt, structured, and devoid of charm, aligning with the stereotype of German directness. He presents his case as a series of logical arguments, emphasizing his adherence to company policy and his ability to maintain order, even at the cost of personal relationships. The scene satirizes the German focus on structure and protocol-driven negotiation tactics.