I blame the public schools

Preparing for my upcoming Canada trip, I initiated an online chat with a Sprint rep to find out the roaming voice and data rates. Sending an average-length email would, according to the agent, cost somewhere between a few cents and a few hundred dollars. Transcript below the jump.

Read the transcript

Me: Hi, I will be going to Canada this week, and wanted to know what the voice and data rates are with and without the Canada package.

Lakisha: Hi, my name is Lakisha. Thank you for your chat request. Please wait while I review your information.

Lakisha: I will be more than happy to assist you today.

Lakisha: While roaming in Canada with your Sprint device all calls will be billed $0.59/minute, data service is $0.002/KB. Sprint does offer a Canada Roaming plan for $2.99 per month; this plan reduces the voice rate to only $0.20/minute.

Me: But not the data?

Lakisha: Correct.

Me: And data is 2/10 of one cent per KB, is that right?

Lakisha: Data is $2.00 per kb.

Me: $0.002/KB is very different from $2.00/kb - could you please confirm the rate

Lakisha: $0.002/KB is the same as $2 per kb

Me: $0.002 is 2/1000th, right? Which is very different from 2.

Lakisha: The data rate if you were to use it will be $2 per kb.

Me: Above, you wrote $0.002/KB.

Lakisha: Which is the same.

Me: You're kidding, right? So, a 5KB email is $100 or 10 cents?

Lakisha: It will not be 10 cents because you will pay $2 per kb.

Me: Can you please review the transcript above. The first thing you said is $0.002/KB.

Lakisha: I do understand

Lakisha: The data rate within Canada will be $0.002kb which is compatible to $2 per kb.

Lakisha: Would you be activating the Canada reduce rate plan today?

Me: 1 cent = $0.01 ! There's a difference between using 1000KB and being billed $2 and $2000

Lakisha: You can always call our toll number which is 8882267212

Lakisha: Thanks again for choosing Sprint Worldwide chat. Have a great day.

Lakisha: has disconnected.

So, $1=$0.001 (=1/10 of one cent), and 1 kb = 1 kilobit = 1 KB = 1 kilobyte (=8 kilobits). Using Lakisha's "is compatible to" operator (you'll learn about it in higher-level math classes), a 5 KB email costs 1 cent, which is compatible to $80.

Before you go mocking Sprint, note Verizon isn't much better.

Restaurant wine prices: some examples

Following up on the table of wine price markups at restaurants, here are a few current examples:

1. If you must have Beringer White Zin, have it at Sperry's ($30) rather than at Jim Kelly's ($42, 40% higher)
2. Jim Kelly's is also not the place for Pinot Grigio. The 2005 Foley at $91 is 52% higher than at Park Café, and the 2005 Santa Margherita is 66% higher than at Mafiaoza's.
3. Why the non-vintage Veueve Clicquot is so popular I don't know, but if you must, have it at P.M. for $80 rather than Park Café for $140 (75% higher)
4. To really celebrate, have the 1996 Veuve Clicquot. You could spend $400 at Midtown Cafe, or $250 at the Bound'ry (and have $150 left over for dinner).
5. J. Alexander's has a bottle of Conundrum for $40. Saffire has a half bottle for $36.
6. Mollydooker Maitre d' is $36 at Watermark, but 81% more at Radius10.
   
   And the most remarkable difference:
7. Bonny Doon 2003 Le Cigare Volant is $45 at Watermark. You can have two bottles for less than the price of one ($100 !!) at Sunset Grill.

Over all, for wines that appear on many of Nashville's lists, J. Alexander's, Watermark, and Mafiaoza's tend to have the lowest prices, while Sunset Grill, Jimmy Kelly's, and Acorn often charge fifty to one hundred percent more.

Restaurant wine prices

We all know that a bottle of wine at a restaurant is substantially more expensive than at a retail store. I use the example of a restaurant wine list in my pricing class to motivate varied concepts, from extremeness aversion to product-line pricing to price discrimination. But just how expensive are the wines at Nashville restaurants? The following attempts to answer this question. Sleep-inducing methodological details are provided for the overly-curious at the bottom.

I selected restaurants with online wine menus. From each menu, an average of 20 bottles were randomly selected, representing reds, whites, and sparkling wines at a range of prices. Additionally, some common wines were used as controls (a majority of restaurants have Conundrum and Veuve Clicquot Yellow Label, for example). Prices are relative to national median retail prices.

In short, Café Margot is the best deal in town and Acorn has the dubious distinction of being worst, by a comfortable margin.

See the table

This is not intended to be a ranking of a wine list's or restaurant's quality or its service. It is the adjusted ratio of the price of several random bottles of wine to their national retail averages. No more. Also, restaurant wine prices in Nashville include 9.25% sales tax and 15% liquor tax, and retail wine prices in Nashville are quite high (curious why?). Therefore, while a ratio of 200 implies twice the national median prices, it will be a substantially lower markup over local retail wine prices. Markups in the table below refer to markups over national retail prices, not the restaurant's markup over its cost.

Nashville Restaurant Wine Prices
Restaurant Notes, link to wine list	bottles (by the glass)	Price Ratio (lower is better)
Café Margot	116 (16)	186
Great bargains throughout the list, but the best are in the higher-end reds, which rival retail prices. [list (pdf) found here  $28-$135]
J. Alexander's	78 (27)	193
Cheapest Conundrum of any list at $40. Lowest-priced wines have high markups, but the $40+ range is great. [list (pdf) found here  $26-$65]
Tin Angel	78 (27)	204
Large variance, with some great bargains mixed in with less favorable markups. [list (pdf) found here  $26-$75]
Flyte	103 (90)	209
Fairly consistent pricing. The $50-$60 range has the lowest markups. Upper-end sparklers have the highest. [list  $24-$110]
Valentino's	145 (15)	216
Very large variance in markups, ranging from about 20% to nearly 300%. [list (pdf) found here  $27-$230]
P.M.	22 (12)	220
Best Veuve Clicquot price at $80. Very reasonable given that lower-priced wines are usually the most marked up. [list  $27-$30]
Mirror	23 (17)	222
Small, unpretentious list with reasonable prices on lower-priced wines. [list  $25-$42]
Old Hickory Steakhouse (Opryland)	160 (20)	225
Highly variable pricing, ranging from 50% over retail to well over 300%. [list (pdf) found here  $34-$200]
Old Hickory Steakhouse (Gaylord Orlando)	114 (25)	228
NOT IN NASHVILLE [list (pdf) found here  $47-$490]
Ombi	45 (24)	228
Strangely, the better deals are on several under-$40 wines. [list  $32-$80]
Watermark	380 (33)	232
Some of the lowest Nashville prices on several $30-$60 wine-list staples. [list (pdf) found here  $32-$300]
Tayst	78 (24)	237
Fairly consistent markups across the list, and lowest prices on several champagnes. [list  $32-$135]
Bound'ry	222 (44)	239
Eclectic pricing with some of the best deals alongside some of the worst markups in Nashville. A few very good bargains at the high end. [list  $26-$250]
Carraba's (Nashville & Cool Springs)	37 (30)	241
Highly variable markups. [list (pdf) found here  $20-$42]
Yellow Porch	54 (36)	243
Fairly consistent pricing. Mostly common wines, all priced in the middle of Nashville range. [list  $26-$64]
Rumours	75 (74)	247
A couple of bargains in the $60 range offset some 200% markups n the under-$40 range. [list (pdf) found here  $26-$60]
Amerigo	53 (29)	247
No real bargains under $80, but a couple of high-end wines rival retail prices. [list  $26-$65]
New Orleans Manor	37 (21)	250
Damning a nation with faint praise, the list featuress Blue Nun as "Germany's most famous wine, Soft and mellow with a natural sweetness." [list  $22-$49]
F. Scott's	270 (40)	251
Very deep list, but what it has in common with other Nashville restaurants is usually priced higher than the competition. [list  $30-$475]
Mafiaoza's	129 (62)	251
Reasonable prices. No real bargains, but nothing outrageaous, either. [list  $22-$135]
Caffe Nonna	34 (23)	251
Top half of the list is pretty reasonable, while on the bottom half of the price range, 200% markups are the norm. [list  $29-$57]
Sunset Sam's (Gaylord Orlando)	42 (29)	254
NOT IN NASHVILLE [list (pdf) found here  $31-$52]
Saffire	101 (16)	254
750 ml of Conundrum will run $72, worse than any other restaurant. Several other wines also have highest prices in Nashville. [list  $28-$100]
Cabana	75 (35)	255
[list  $20-$42]
Buca di Beppo	46 (24)	256
[list  $24-$39]
Sperry's Belle Meade	144 (32)	258
Highest prices on Opus One, Roederer Brut, Moet White Star, etc. [list (pdf) found here  $24-$280]
Sperry's Cool Springs	250 (54)	258
The same Nashville-leading markups as its sister location, though with a few extra markups. Cavit Pinot Grigio is $30, highest in Nashville. Strangely, the other Sperry's location has it at $22. [list (pdf) found here  $32-$310]
Zola	108 (32)	260
No bargains to be found. [list  $24-$120]
Park Café	62 (24)	260
Veuve Clicquot Posardin NV for $140? That's more than a case of Brut Rose (which is a better wine). [list  $31-$115]
Midtown Café	130 (50)	261
Very consistent (high) markups, top to bottom. [list (pdf) found here  $26-$199]
Eastland	50 (23)	264
[list  $29-$90]
Radius10	67 (25)	273
Cheapest bubbly, an $8-$9 Barefoot for $38??? [list (pdf) found here  $35-$130]
Anatolia	16 (16)	278
Low-price wine lists have a disadvantage since the markups are usually higher, but Yellow Tail for $25? [list (pdf) found here  $23-$37]
Sunset Grill	241 (68)	279
Seasonal 50% off wine sales suggest regular prices are not too great. Several wines over four times retail. [list (pdf) found here  $25-$400]
Merchants	133 (48)	279
[list  $25-$215]
Sambucca	95 (23)	283
Come on! You can't offer a bottle of Lafite Rothschild ($400) without listing a vintage! [list (pdf) found here  $28-$150]
Jimmy Kelly's	61 (25)	291
Several wines have highest prices in Nashville. [list]
Acorn	69 (46)	316
If you search long enough, you may find a wine price that is merely insulting. $70+ reds have some of the highest markups on the menu. [list  $26-$120]

Am I missing your favorite restaurant? Post it in the comments, preferably with a link. Disagree strongly? Dissent meekly? Have a thought or experience to share? Let me know that, too.

METHODOLOGY (very rough sketch)

From each wine list, between 10 and 36 bottles were randomly selected, depending on size of list, with stratification: (among three least expensive, among three most expensive, but under $500, and among three closest to $60) X (a white, red, and sparkling). Prices were compared to median retail prices among retailers indexed by winezap.com and wine-searcher.com. Additionally, several common wines, each listed on at least one-third of the wine lists, were recorded. If too few selected wines have substantial retail representation (and thus higher confidence in the median), additional wines were randomly drawn. The composite score weighs whites, reds, and sparkling wines equally (33% each), weighs individual wines with greater median confidence (lower standard deviation) more, and places additional weight on the basket of common wines.

First -- changes in the weighing formula do not have a huge impact on scores, with a few exceptions. However, a different random selection of wine from a large list, if markups are highly variable, can make a significant difference. Greater selection and bootstrapping could solve this, in part. Instead, I offer a caveat (don't take this too seriously) and suggest that one not make much of differences in scores when scores are close. Average standard deviation of the ratio on a wine list is 60.

I wonder if the higher markups are associated with higher corkage fees?

UPDATED: More restaurants added (25 September 2007)

UPDATE 2:Today, this table was reprinted in the Nashville City Paper (pdf). Thanks to Hoyt Hill of Village Wines, I am probably no longer welcome at half of Nashville's restaurants. On the other hand, if Margot would like to invite me for dinner, I accept. (2 October 2007)

UPDATED: Corrected Gaylord properties (4 October 2007)

Discounting in reverse and other anomalies

Yesterday, we saw several examples of an intriguing discount plan at Wal-Mart. Not to be outdone, Target follows suit:

A behaviorist might argue that if you're getting thirty cents of happiness thinking that you found a sale, then Target is actually making you better off. But behaviorists say lots of things. For example, don't change the price, but tell them you did, as Mark Hurst discovered, lifting the sale price to uncover...the same price:

Continue Reading

"Isolated cases." I hear you roll your eyes. But wait, there's more:

But before we get too jaded, there are some retailers doing right by their customers. Home Depot's prices are so low, they're practically giving things away:

Hat tip Consumerist 1, 2, 3, Mark Hurst, EclectEcon

Wal-Mart’s «yesterday low prices»

I'm no marketing whiz, but this does not seem to be a sensible discount policy.

Why buy one when you can have two at trice the price?

Read on for more Wal-Mart "discounts"

These next two suggest that "saving" need not be financial. You'll pay just as much, but you'll feel better about it if we add something yellow to the sign. Everybody loves yellow.

And now we're just getting silly. Is "Rollforward" a word?

Hat tip Consumerist, Lee Aase, and random encounters

UPDATE (2 October 2007): Apparently, employee morale at Wal-Mart is low. Surprised?

If you can read this, you pay less

When I was in St. Petersburg with my mom, I attempted several times to go into the "Natives" line to acquire tickets for museums, parks, and shows. While my native Russian is now heavily accented, I figured I could manage a polite "two tickets please" without giving myself away. My mom laughed as I failed and failed. It was not my pronunciation that was at fault, but my American manners.

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"Why are you saying please?" My mom asked. "She is giving you a ticket and you are giving her money. What else do you owe her?"

Of course, this form of price discrimination, based on whether you can ask for tickets with neither a noticeable accent nor any hint of politeness, annoyed the tourists, who saw that prices were up to ten times higher for them than the natives. How to avoid a tourist revolt? Thailand has the answer (via Siam Jai):

At San Kamphaneg Hot Springs, you can pay less than the posted English prices. All you have to do is figure out exactly how much less. How likely are tourists to have mastered Thai numbers?