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The Price Is Right

I was standing in a queue at the swimming pool some time ago and overheard two people talking.

‘They keep changing the prices, and the times.’

‘Aye, they don’t know what they’re doing do they?’

Come on down

I didn’t join in the conversation  but just thought to myself …well: ‘correct on the first statement’ and ‘Not Correct on the second’.

As far as I could see, the council concerned had made changes to prices for pool entry, and to the hours of peak and off -peak operation. They had done so, I assumed – and on later checking, confirmed it was the case – to see what public reaction would be. I don’t mean by that ‘public reaction ‘as in an exclamation of:’ Oh no, they’re changing things and putting prices up.’ I mean reaction in the sense of what do people actually do when matters such as peak hours and prices change. In technical terms, what are the various elasticities of their demands.

I can recall another council – no longer with us – where councillors decided that the ‘fairest‘ way to alter prices for leisure and sports facilities was to increase prices by the rate of CPI  inflation despite officials warning that was a really bad idea  . So, in that year, prices for a swim increased from £1 to £1.03. The notion of basing price increases on inflation was quietly dropped the subsequent year as prices were rounded up to a more convenient figure.

I will always argue that understanding how people react to actual changes in the service mix [availability, peak hours, eligibility, costs etc] is critical to getting the service mix right.

It’s particularly important when it comes to matters such as charging. By and large, public bodies of all kinds are very bad at making charging and pricing decisions, find it hard to do this, delay too long in changing prices, and then get into a defensive tangle about what they have done.

I think this weakness on pricing of public services and facilities is because of a number of reasons.

Firstly,  because increasing prices/charges /fees for public services always attracts noisy and bad publicity in a way that rarely occurs for commercial businesses; politicians do not like such criticism and often run scared of it. It’s also difficult because most public bodies have very limited knowledge of their ‘customers’ and are wary of putting money and effort into finding out more about them . Fundamentally though, I think it is because the acme of public service provision is seen to be our health service – ‘Free at the point of need’ [and rightly so in our judgement, just in case anybody is upset reading this blog].

If you think – deep down – that ideally we should not charge for public services, then it’s no wonder that you struggle when it comes to striking a price  and often hedge that around with an array of concessions based on some often poorly defined criteria . If you look at  the Adult Education Programme for Edinburgh you’ll see an example of this . The enrolment and fee payment  details or evening classes with a basic fee of about £8.00 a session show  16 different categories of concessions or charge reductions. Make sense of that if you can .

In this last week,  when the Scottish Government has announced plans to enable councils to introduce Transient Visitor Levies,  discussion and decision about  pricing and demand elasticity for visitor rooms will become critical in several councils across Scotland  .

Are decision-makers, and those who advise them, well enough equipped to engage in critical thinking and make decisions based on that thinking ? We shall see.

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