Price Gouging & Viswa Lab

I stayed in an IBIS hotel near the Biannual SMM show in Hamburg.  The show attracts a multitude of visitors and this IBIS hotel was within a short distance from the place where the show was held. I paid Euro 89 for the first day, Euro 180 for the second day, Euro 380 for the third and fourth days and Euro 189 for the fifth day and finally Euro 89 for the sixth day. From the rates you can guess the conference dates. When in Singapore, I stay in the Park Royal where the rates can vary from $200 to $380 depending upon the events happening in the city such as the Formula 1 Grand Prix.

How fair is this? If everyone starts doing this, what will be the scenario? Let us take a look at a few different scenarios.

– A house catches on fire, the firemen says that they have to be paid $20,000 each before they turn on their hoses.

– Somebody is drowning at the beach and the lifeguard says he will save them only if he is paid $10,000

– In shipping there is already a ridiculous situation that when a ship is in distress and when the salvage companies salvage the ship, they can demand almost any amount.

Recently in the news was the arrest of Martin Shkreli, the hedge fund manager who got controlling interest in a pharmaceutical company and raised the price of the drug (which this company had the monopoly on) from $1.50 to $750 allowing him to make a killing on his shareholding and then quit. There were many similar accusations and he has been hauled up on these charges. His lawyers claim that he did not do anything wrong. He just took advantage of “free market” practices.

In the US, atleast 34 states and the district of Colombia have passed price gouging laws that forbid businesses from hiking prices in times of emergencies.

We don’t know the exact defining of “Excessive Price”. Is the 400% I paid in Hamburg excessive or can the 100% premium I paid in Singapore be considered expensive?

Uber, the ridesharing phenomenon, reportedly charged $100 minimum and upto 4 times their routine charges as part of their Surge Pricing algorithm during the Australian hostage crisis when everyone wanted to move in or move away from the site.

Can McDonalds and other breakfast joints charge 3 times for coffee in the morning when everyone wants a cup of coffee? Is this a price we pay for “free market” practices in a democracy?

Viswa has consistently maintained low pricing in the last 25 years. When it entered the market, the competitors belonging to Classification societies charged USD 450/sample and payment was made in advance for the planned number of samples. What is more, if the client did not sent that many samples, that was too bad, they did not get any credit back. At that time. Viswa started charging a maximum of USD 250/sample. Even today Viswa charges on USD 250/sample for a random single sample. Even when Viswa helps in critical situations Viswa does not charge for advisory services and does not take advantage of opportunity costs for a customer who is in trouble. Compare this to our competition who charges $960/sample for a random single sample.

In the end, it all comes down to ethical business practices and controlling greed.

–  Dr.Vis

President,

Viswa Lab.

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